Fleet customers are demanding more flexibility today than ever before. Current inflation concerns are seeing businesses become more conscious about their fleet utilisation, which for many includes re-evaluating their vehicle needs. In fact, the latest data from the Australian Corporate Fleet Insights report showed that the top priority for fleet managers currently is reducing running costs. For forward-thinking fleet companies, the findings present a new opportunity to expand their business while enhancing the experience for clients.
Businesses today want shorter terms and less commitment. They are looking for an option that can adapt to their evolving staff vehicle needs. This reflects a broader trend impacting the automotive industry; research has shown that consumers are widely leaning towards flexibility and away from traditional car ownership models. In fact, 81 per cent of Australians say they are open to subscribing to their next car rather than purchasing it outright.
Alternative car ownership models such as subscription have been steadily growing in popularity in the automotive industry, both globally and here in Australia, and now businesses are also seeking the benefits. This provides the fleet industry with the chance to enter the subscription ecosystem, and reap the rewards.
So what is car subscription?
Essentially it provides customers with the same benefits of owning or leasing a car through regular weekly payments, without the long term commitment. Alongside this, costs such as insurance and registration are covered, making the entire process streamlined. The weekly payments are appealing to businesses because there is no need to spend big upfront, and can easily fit within monthly and quarterly budgets. It removes a burden for them as the vehicles are no longer on their balance sheet.
Additionally, businesses aren’t locked into the vehicles they choose, and can upgrade or downgrade them as their needs change. By offering subscriptions, you can provide customers with the freedom to scale up or down, meaning they can handle an increase in sales, work or output in a cost-effective manner and can handle growth without suffering in other parts of their business.
The flexibility of subscription enables businesses to understand the ideal time duration for vehicle usage, and the types of vehicles their business needs, offering a more customer-centric approach to long-term leases. Fleet and leasing providers are ideally positioned to add a subscription product to their mix, as they have the tools to accommodate business clients.
Integrating a subscription service doesn’t need to be difficult. Loopit provides a platform for fleet and leasing companies to easily offer their own vehicles for subscription to clients. The ‘subscription in a box’ service includes the software, customer management, billing solutions, consulting, training and services needed to integrate subscription. Additionally, the SaaS solution is both modern and flexible, making it significantly more easy-to-use than traditional ERP software, providing a more streamlined customer service experience.
A less obvious benefit is that subscription can accelerate the rates of electric vehicle adoption for businesses. Many organisations are considering electrifying their fleets, but won’t take the leap given the current market risks. Subscription allows these clients to trial an EV, and better understand their emission reduction strategies.
Your clients may be uncertain of whether EVs are suitable for their fleet requirements, whether their business can support the infrastructure requirements of an EV fleet, or which EV model is right for their business. Subscribing offers them with a ‘try before you buy’ solution, so they can make a more informed decision before committing to going electric.
Finally, it’s important to note that vehicle subscription is not a replacement for leasing. Instead, it is an additional service that fleet companies can integrate into their business to increase revenue.
A subscription arm will extend the useful lifecycle of each asset. Subscribers are less sensitive to vehicle age and condition, so after the lease period on a vehicle ends, it can be subscribed by another customer before disposing. This means you can earn additional revenue prior to vehicle disposal each time. Additionally, it allows fleet and leasing companies to dispose of a vehicle when market conditions are ideal, rather than needing to sell it right after leasing.
Moving forward, a fleet provider without a subscription business will be like a real estate agency without a rent roll.
