An Experience With Car Subscription. Do You Really Need To Buy A Car?

We live in interesting times, to say the least. And with so many changes happening constantly, we are being kept on our toes at all times. At least as consumers. Just a few years ago, we were introduced to an app-based taxi hailing service that turned into a ride hailing service. That quickly changed the game for the parties on both sides of the fence. It is not perfect, but it has improved mobility for many. Even if I already own a car, a ride hailing service is convenient to move around in the city without worrying about parking. It also offered others another option to making a living.

Fast forward a few years, and we now have our meals, snacks and even groceries delivered to us anywhere we are (as long as it’s urban or suburban, generally speaking). So as consumers, we are going through a paradigm shift that is altering some of our consumption habits. And now in Malaysia, not only do we have the availability of ride hailing, but also car sharing and car subscription services.

Ride Hailing vs Car Sharing vs Car Subscription

While these three options ultimately put you in a car, there are obvious differences. With ride hailing (or e-hailing), you request for a car much like a taxi i.e. when you need to go somewhere. Except it’s a (semi) private vehicle driven by someone (who now requires a Public Service Vehicle license).

On the other hand, the car sharing service is an evolution of car rental. The popular ones like GoCar and SoCar allow you to book a vehicle of your choice via an app, for pick-up from a predetermined location and time. You can either use the car by the hour or by the day so you only pay for it when you need it; there are also options for longer term use. You then return the car to the same location and sign off; you can also request for one-way trips but these are still limited. These cars can either be owned by a company (like GoCar and SoCar) or by individuals (Trevo and Moovby services), depending on the service provider.

However, the above options are mainly for short term usage either for the hour or a few days. If you need a car multiple times a day at different or odd hours, subscribing to a car might be the more practical option. A car subscription service is similar to car sharing, but on a longer term basis. You will get to keep the car in your driveway and have ready access to it as long as you have an active subscription. The subscription providers (popular ones are Renault and Flux) generally get you to determine the duration you need e.g. a month, a year, or even up to three years. Some subscriptions even allow you to switch cars within their fleet e.g. if you’re hoping for a fun week away and prefer to drive a hot hatch instead of the SUV you subscribed to.

Living With A Car Subscription

All the ride services mentioned here were obtained in a personal capacity for the experience, whether it is from a car sharing service or a subscription service. But this is not an outright comparison as these different services serve a purpose in their own way. Because car subscription is the latest in the market, we thought we would do a bit of highlight on this.

Thus, this is not a review of any particular car subscription service, but just a trial of the viability of such a service as an alternative to outright vehicle ownership. I had made use of Renault’s car subscription because they had an option for a trial period (a choice of one week or one month), so I did not have to make a longer commitment.

The Renault trial only had the Captur compact crossover available, which actually met my needs for the short term i.e. sufficient passenger and cargo space. By subscribing, I essentially have full-time use of a car without actually owning one. All I had to make sure of is that it has enough petrol and the tyres are properly inflated (to optimise fuel efficiency, because that is how I stinge). And that I don’t collide with anything.

Car subscription addresses a concern of ride hailing which is car availability at certain hours and locations, as well as peak pricing depending on demand. Further, it also cuts down on the need to get to a particular location to pick up and return a shared car multiple times, especially if the nearest location is not conveniently located. But some car sharing companies are regularly expanding their fleet and coverage, so this may not be a huge issue in the future.

Subscribing to a car is fairly easy as long as you have an internet connection and an internet browser. Depending on vehicle availability, you could be expecting a call from a friendly customer service personnel in a few days’ time to arrange for collection. Prior to getting the key (after paying online via credit card), there are documents to sign (on a phone screen), and also a briefing on the vehicle and where the important buttons and controls are. You and a Renault staff would also do a visual inspection of the physical condition both outside and inside.

Personally, this gives assurance to both the provider and customer as they come to an agreement on the general condition at the moment of handover. This also reinforces some accountability to the subscriber / customer to ensure the vehicle is returned the same way, as there will again be a visual inspection done and a virtual document to sign off.

In contrast, a car sharing service allows someone to return the car in a less-than-desirable condition because there is no human contact to be accountable to at that moment; you just sign off on an app. That person could be charged for the eventual clean-up or damage, but it could be a while before that happens. I have actually picked up from a car sharing service a car I would not want to show my mother, and not just once. Could I have rejected it? Probably, but I had gotten it at a time when I needed one. This isn’t to say that every shared car suffers the same fate, but the possibility is there at this moment.

With a subscribed car, there is more responsibility as you take ownership of everything that could happen to it during this period, as you would if you owned the car, even when it is sitting in the driveway or parking spot. The vehicle is covered by insurance, but longer term possession means higher exposure to associated risks, like shopping cart dents, etc. On the bright side, the car is not exactly your “sayang”.

The Ups And Downs

Like everything else, there are benefits and disadvantages to using a subscription service. The upsides are:

• No downpayment – If you are buying a new car, the downpayment is generally 10%. If you are aiming for a RM70,000 car, that is RM7,000. Subscribing to a Captur (non-trial) involves a security deposit of RM2,500. There are also registration fees and other incidental costs to consider when buying a car.
• No long term loan – Unfortunately, many can’t afford the high monthly payments associated with a shorter term loan e.g. one or three years. Loans are usually stretched to five and even seven years in some cases to make the monthly payments bearable. This puts one in a financial commitment that may be too long to accept.
• Depreciation – A strong talking point in this market: second hand value. Except for the most desired brand(s), many will find that their loan commitment is higher than the car’s value when the car is sold. That means you need to top up from the sale proceeds to pay off the loan. Moreover, over the five or seven years you hold on to the car, the brand could have undergone some changes in desirability. If the brand image is negative, the car’s value suffers further.
• A new car every few years – Depending on your plan or provider, you could swap for a newer model once it is available and perhaps pay a nominal sum, if any, for the update.
• A different car occasionally – With some plans, you are allowed to switch vehicles within the fleet for a given amount of time, so you effectively have a variety at your disposal.
• No maintenance cost – Although you are still required to bring the car in for servicing, it is not done at your cost because the car technically does not belong to you. Although for some plans, you might have to change wear & tear parts, like tyres for example. But there are options to cover them at additional cost. Furthermore, you do not have to worry about insurance and road tax costs and renewals.
• Insurance coverage – The vehicle is covered by insurance but there may be incidences where you will have to partly pay for certain damages.
• Tax savings – This is mainly for companies which provide vehicles to their management or employees where the companies can claim the full tax benefit of the subscription paid. With a subscription service, the company also does not need to include the vehicles in their balance sheet, or deal with the maintenance or sale of the cars.

The disadvantages:

• It’s not yours – But no one really has to know that, if that matters to you. Even if you bought a car, technically it is the bank or finance company that has true ownership until you have finished paying them.
• It doesn’t seem cheap – The service providers don’t run a charity. They would have calculated the costs and risks and decided on the charges based on these factors. Although you don’t pay outright for the maintenance and insurance, they are built into your monthly subscription.
• Limited choices – Your choice of vehicle will depend on what is in the fleet of your provider. For example, with Renault, I only have a choice of a compact crossover, an SUV and a hatchback for the moment. If I want an MPV, there is nothing for me.
• Limited mileage – The Renault subscription plan caps you at 20,000 km a year. That works out to 54.8 km a day, which is sufficient for many. There are also options to increase the annual cap. Some services place a monthly mileage cap instead so it is a factor to consider if you plan to drive often.

Is Car Subscription For Me?

As mentioned, all these methods of being in a car have their pros and cons. If you are thinking of signing up for a car subscription, you will need to be within these (but not limited to) criteria:

• You are not the type who keeps a car for years until it rusts and disintegrates and you are forced to buy another one.
• You like changing to a new car every few years.
• You don’t like to put up For Sale ads, or meet potential buyers or speak to used car dealers.
• You don’t like dealing with a bank.
• Your home, office or favourite mall are not convenient by public transportation.
• You don’t enjoy being with strangers in public transportation.
• You enjoy the spontaneous teh tarik meet-up with friends and it’s usually further than walking distance.

A car subscription will not be right for you if:

• You enjoy the feeling of owning something.
• You are a mod kaki.
• You have off-site meetings often, and sometimes they are at opposite ends of town.
• You like to plan the regular outstation trips.
• You like buying cars with cash.

This is just a brief insight to a possible alternative to your mobility needs. We hope it is helpful. We, as consumers, have a greater variety of mobility choices now, including public transportation (there are even free ones). But it really depends on your location, and your particular travel habits, preferences or requirements.