Over the last few years, car manufacturers have been seemingly racing to launch their subscription services. Their goal is to move their customers away from being one-time-paying owners towards monthly-paying subscribers. This way, they can continue profiting beyond the initial sale of the vehicle. Nissan is the latest to enter the arena with their car subscription service.
2018 saw an explosion of luxury car brands coming out with their subscription service offerings. Cadillac beat them all to the punch a year earlier, but Mercedes, BMW, Porsche, Audi and even Lexus all showed up to compete with Cadillac for $1-5k a month of your disposable income.
For the rest of us mere mortals though, the only real option was Volvo, which started at $700/mo and gave you five vehicles to choose from. Their model is a lot closer to a traditional lease than their competition, however. It doesn’t allow you to swap your vehicle except after a full year of use. In that sense, it’s closer to a smartphone upgrade cycle than a true “car as a service.”
All that changes now that Nissan has entered the ring with their Switch service. Their basic tier offers a choice of four vehicles at $699/mo and their Premium tier offers six additional vehicles for $899/mo. The Premium tier also grants you the option of an 11th vehicle – the GT-R, for an extra $100 a day. Both plans include insurance and unlimited “switching”.
Nissan also seems to have taken notes from other manufacturer’s services; after all, they’ve taken their sweet time coming to market. They’ve baked in insurance and maintenance but also other less-commonly baked in features like roadside assistance, cleaning and concierge.
The real question is, are we ready to give up car ownership? I think we are, if they make us an offer we can’t refuse. If the convenience of a subscription model outweighs that of ownership at a lower price, they’ll probably convince a lot of people. Especially now that Nissan, a very mainstream car brand, has entered the market. It’s only a matter of time before Honda, Toyota and Chevrolet also follow suit.
There will likely be a lot of resistance to this trend, especially by older generations who know the feeling of getting your first car. Millennials however have been increasingly moving away from that paradigm. Be it due to financial hardship or environmental concerns, they’re finding more convenience in services like Uber or carpooling. Especially those living in bigger cities that can rely on public transport.
This car subscription service also gives Nissan a leg up on Uber and similar services: the car remains in your possession at all times. If something comes up and you need to run out in the middle of the night, your most recent car choice will be in your garage.
That’s not to say that car ownership will ever go away though. Over the long-term, it’s still the more affordable option and smarter investment. It’s just nice that those in the market for a car have more options now.