The car subscription business

The Stuttgart-based start-up Vivelacar offers cars in a subscription model combined with car sharing. Founder Mathias Albert explains how the service is intended to drive the mobility revolution.

Streaming services, fitness studios and newspapers - subscription models have long been established in many areas of life. So why not subscribe to cars as well? That may sound absurd at first, especially in the country where washing your own car in the driveway on Saturdays is part of folklore. But according to a 2021 survey by strategy consultants Oliver Wyman, one in three Germans is now interested in a car subscription. As many as 14 percent of Germans have even subscribed to a car. According to study author Joachim Deinlein, customers particularly appreciate the flexibility of returning their cars. "It's in line with the spirit of the times to enter into a commitment that can only be terminated in the short term, even when it comes to cars," he says. So it's a market with a lot of potential, and accordingly resourceful founders have long since begun to satisfy the Germans' longing for the car subscription. And now, after private customers, they are already setting their sights on the next target groups.

One of them is Mathias Albert. He launched his platform Vivelacar in 2019 and can explain why customers are gravitating toward solutions like his. "I don't have to decide upfront how long I want to use the vehicle. And that's the biggest difference compared to all other offers," Albert says, explaining the concept. As a result, he says, the subscription is more flexible than other offers. "A rigid leasing model for 36 or 48 months is not flexible," says the founder. Vivelacar's cars can be terminated at any time with three months' notice. In the process, the lease term can vary between a few months but also several years. In addition, the subscription cars are available more quickly than with a car purchase. As a rule, it takes eight to ten working days from the time of booking for customers to receive their car. They can either pick it up at a nearby dealer or have it delivered to their doorstep.

Airbnb for vehicles

The platform, founded in 2019, does not buy its own cars, but provides cars from dealers and manufacturers. Albert describes the business model as "Airbnb for vehicles." According to Albert, it is more sustainable to use cars that have already been produced than to order the vehicles. "These are cars, they're there anyway. They're just better used." Customers can subscribe to the cars on the Vivelacar website or on the sites of the car manufacturers themselves. For a monthly fee, customers receive a vehicle of their choice with a selected monthly mileage package. There are no costs for insurance, tax or maintenance. Only fuel has to be paid for additionally. The cost of a subscription can vary greatly depending on the model and mileage package. For example, a Ford Fiesta Titanium with 95 hp costs 380.69 euros a month with a mileage package of 500 kilometers. An electric BMW IX XDRIVE 40 with 326 hp is available from €1,327.90 per month with a mileage package of 800 kilometers.

The start-up cooperates with around 800 dealers and manufacturers in Germany, Austria and Switzerland. In Germany, for example, there are cooperations with Mercedes-Benz, BMW and Renault. Using an in-house tool, the start-up analyzes when it is economically worthwhile for providers to offer vehicles on a subscription basis for the time being. For dealers, it could be profitable to first let the new cars earn money in the subscription model and then sell them as young used cars. In some cases, suppliers can make more money on a car overall this way.

Subscriptions should attract customers to hybrid and e-cars

According to Albert, the subscription model could become a "big driver" in the mobility transition. It is a tool for manufacturers and retailers to convince people of more sustainable mobility. Since the subscription can be canceled at any time, customers can try out hybrid or e-vehicles without taking the risk of making a bad purchase. Already 41 percent of the vehicles arranged by Vivelacar are electric cars or plug-in hybrids. In the near future, Vivelacar plans to expand its offering to include car sharing, so that up to three households can share a vehicle. The idea is to transparently calculate how many kilometers each user has driven in order to fairly divide the subscription fee. It is not yet clear exactly how this will work. If the car-sharing service is well received, it could reduce the number of cars on the road in the long term.

Pushing the mobility revolution sounds like a mammoth task. But Vivelacar founder Albert isn't slowing it down; he's already thinking about the next steps.

Since last year, Vivelacar has been pushing its offering for business customers. For companies, company cars in a flexible model are interesting, since employees in their probationary period and fluctuation in the personnel area always require a different number of cars. 30 percent of customers already come from the business sector. Albert believes, however, that the percentage will increase even further in the long term.

Vivelacar also plans to integrate a purchasing solution into the platform by the end of March. This will enable users to sell their used cars directly via the platform for a guaranteed price. To this end, Vivelacar is working with BCA, one of Europe's largest auction platforms.

Vivelacar also wants to tap into markets outside the DACH region. This is to happen in Europe first. One of the first countries will be France. After that, countries such as Spain, Great Britain, the Netherlands and Poland could follow. At the end of the year, the start-up also wants to gain a foothold in the USA.

Mathias Albert believes that his service will spread internationally as rapidly as Netflix or Spotify, whose services also broke up established industry models. But whether people will be as enthusiastic about giving up their own cars as they are about giving up their CD collections remains to be seen.