Subscription models are already very successful in many consumer areas. We watch series and listen to music by subscription and even have the option of simply subscribing to individual everyday products, including fresh food. In contrast, subscriptions to more expensive products such as cars are still not very widespread, although the high price could be a long-term argument in favor of a car subscription, as ERGO also asserts.
In order to shape the future of mobility, German car manufacturers must also question their traditional business models and open up to new options. They have almost slept through the change from the fossil combustion engine to the electric motor, which has already cost them market share. They should therefore not miss out on another trend, but ideally set it themselves.
In a car country like Germany with big brands like Volkswagen, Mercedes, BMW, Opel or Audi, one's own car is traditionally a status symbol. It stands for prosperity, freedom and a standard of living that has been earned. But for some years now, a counter-movement has been forming that is growing very slowly - not only in terms of numbers, but above all in terms of age.
The young generation, who will soon have their driving licence, is increasingly sceptical about car ownership. And these are by no means just climate activists, because the trend towards sustainability is only one aspect. Owning a car is no longer enough, especially for the young, urban population. They are looking for diverse experiences and prefer to invest their first earned money in travel, unusual events and hobbies that promise exciting experiences.
They often no longer need their own car for this. On the contrary: the high purchase costs would devour their entry-level salaries for a few years and leave no more room for experiences. So why not just ride a hippy cargo bike and use the sustainable Deutschlandticket for longer distances?
Car manufacturers will also observe these developments and draw their conclusions. The crucial question for them is:
How can the car remain so attractive for the next generation that they will not want to do without it altogether?
A consistent restructuring does not stop at electrification, but only begins with it. As digital natives, the younger generations do not distinguish the car from other mobile devices. Smart and intelligent functions, packaged in appealing design, pose completely new challenges for the engineering-driven German automotive industry. Instead of perfected gaps, digital services and software solutions will become even more important than today. For the future viability of the automotive companies, it will therefore also be important to further digitalise their products.
Consequently, experts are already predicting a price war in the e-car sector. A new price increase for the integration of intelligent assistance systems, including autonomous driving functions, would come at an inopportune time. At the same time, the question arises as to who still wants to buy a car that will be functionally obsolete after only a short time. And the time span until then is getting shorter, because digitalisation is not only the solution for designing attractive car models, but at the same time an enormous acceleration factor for further development work. With digital technologies such as artificial intelligence or the upcoming quantum computers, new development ideas can be implemented faster than ever before.
To a certain extent, software updates can simply be installed at the next workshop visit, but as soon as new hardware is required, additional costs arise. Various subscription models could offer solutions to this technical challenge. Either only the upgrades could be subscribed to, so that car buyers are reliably supplied with current functions at a predictable price. Or there could be a subscription for the entire car, including the upgrade package.
Here, too, there are a number of possible package options to cover different usage scenarios in the best possible way. For example, it would be conceivable for a model change to be part of the subscription package. This way, customers could choose a larger model if they want to take it on holiday, and have a smaller model for the everyday commute to work.
The subscription packages could also include different mileages. Or they could refer only to certain days, so that the vehicles are available for other customers on the days not booked. The conceivable possibilities are manifold and open up completely new business models for manufacturers.
There are enough role models for this. Many software providers have long since converted their business models to subscriptions and are very successful with them. With this conversion, the automotive industry could also extend its radical technology change to its value creation.
We already know the desire for flexibility and the departure from traditional models from the world of work. The sought-after talents of today and tomorrow no longer want to be in the office five days a week for eight hours. This alone will have an impact on mobility in the medium term. Those who only go to the office on one or two days will probably question the high investment in a car.
For the automotive industry, this means becoming more flexible itself. The successful car of the future consists not only of technology, but also offers the flexibility that corresponds to the spirit of the times.
Text: Falk Hedemann