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From manufacturers to tech companies to insurers, brands across a variety of sectors are all competing to be at the forefront of automotive innovation. A recent example of this is the evolution of the sharing economy. As identified in the Mintel Trend “Unlimited,” smart shoppers are no longer content with the traditional purchasing model and instead are looking for brands to offer them unlimited access for a set fee. As a result, many companies are finding lucrative opportunities in new subscription based models.

Here, Mintel analysts discuss how consumers, insurance companies and automotive brands are leveraging subscription based models in the US automotive industry:

BLO-CBuddy Lo, Automotive Analyst

The sharing economy is playing out in the auto industry through rideshare programs. Now, we see rideshare programs influencing the future of car renting. GM’s $500 million investment in Lyft has already produced synergies, resulting in a rental program where consumers can rent a GM vehicle. If drivers complete 70 fares a week, the weekly fee is waived. The rental program gives consumers flexibility to swap out vehicles with no long term commitment. And drivers are not responsible for covering insurance or maintenance on the vehicle. Uber has partnered with Hertz to provide a similar rental program, where the vehicle will be provided through Hertz, and fees for the rental are deducted from Uber earnings. Hertz will provide limited insurance for drivers in this program.

SR-CStephanie Roy, Director of Insights, Insurance

As insurance companies grapple with the implications of a more on-demand economy, subscription car services are the latest in a line of alternative options to traditional car purchasing and insurance coverage. Many insurers have focused on marketing endorsements for rideshare drivers, while some global startups have found ways to provide hourly insurance alternatives for carsharing patrons. But with manufacturers like Cadillac and startups like FlexDrive, YoYo and Clutch providing comprehensive packages that include everything from insurance to gas, insurers must again make adjustments based on the ever increasing appetite for less permanence.

Most of these new subscription services offer basic $100k per person, $300k per accident limits, with some slight variance for property damage coverage. Cadillac offers $1 Million in liability coverage, while Clutch offers a $0 deductible policy. The appeal for consumers is that they can pay for insurance coverage, the car itself, roadside assistance, maintenance and other various expenses with one monthly payment. While the services are limited in geographic scope, if the model takes off nationally, insurers will face the challenge of getting consumers to understand what gaps in auto insurance coverage might exist and what benefits or risks this all-inclusive model might have. The subscription service also provides a partnership marketing opportunity for auto insurers hoping to innovate and reach consumer groups in new ways.

BO-CBrian Hodapp, Senior Research Analyst, Automotive Marketing

As technological innovation and the sharing economy continue to collide within the automotive industry, a growing number of consumers will first evaluate whether owning a car makes sense before they seriously consider a new car purchase. Although car ownership will continue to dominate the foreseeable future of most consumer lifestyles, on-demand and subscription-based services will be pulled into the mainstream because of their flexibility and cost savings for consumers. This new reality has vast implications for the future of brand loyalty—not only for automakers, but also for the wide range of retailers who offer auto accessories and maintenance services.

Automotive brands will have an opportunity to come alongside consumers as they decide whether to buy, lease, subscribe, or even pay-per-use. Regardless of the chosen path, brands can build trust by putting consumers’ interests first, advising them when it makes sense to switch over to a different type of service. With the expansion and experimentation of subscription service models, marketers are challenged to differentiate between products, with so many variables to consider beyond vehicular features. For guidance, both marketers and brands should keep an eye on the way traditional banks handle the disruption brought by fintech players in the Mortgage & Loan and Investment sectors, as well as the way over-the-top video continues to grow by the side of traditional pay-TV service.

Buddy Lo is an Automotive Analyst at Mintel. He is responsible for researching and writing reports on the Automotive Industry within the US.

Stephanie Roy is the Director of Insights, Insurance at Mintel. She is responsible for providing internal and external stakeholders with insights and analysis on trends in the Life, Health and P&C insurance industries across North America.

Brian Hodapp is a Senior Research Analyst at Mintel, where he focuses on marketing trends in the Automotive, Financial Services and Telecom sectors across North America.