You hear the term “sharing economy” a lot these days. It refers to assets and services that are literally being shared by different people, among whom no one is an owner. The most popular example of this is the ride-sharing service being offered by transport network companies like Grab. It’s like having your own car that’s available on demand, without you having to purchase the vehicle or pay for its operating costs (like fuel, parking, maintenance and insurance).
There’s also the hospitality service of lodging booking companies like Airbnb, which connects house owners to customers around the world who would like to rent their place for a period of time. As with the ride-sharing example above, it’s like having your own home in various locations across the globe — but you only pay on a per-need basis.
Of course, the issue with this business model is that customers can only be served based on the service’s availability. During rush hour, for instance, it becomes extremely challenging to book yourself a car ride. In such instances, you get reminded of the fact that you don’t own the car — you’re just requesting to use it. Which sucks if you’re in a hurry.
Now, there’s a more evolved (and certainly more expensive) version of the car-sharing concept, and it’s essentially by way of subscription. It’s like a timeshare agreement with your friends, but again without the hassle of maintaining the vehicle. And it’s not just cars that are being offered in this way at the moment. I’ve read about a company overseas that applies the principle to expensive wristwatches. You pay a monthly rate — a hefty sum, obviously (though not as prohibitive as buying a Rolex yourself) — and you get to use different timepieces of your choosing. So you subscribe to the right to wear the watches for a limited time. Imagine having a vast watch collection without shelling out for exorbitant price tags that high-end horology commands.
But back to cars. Automakers are now likewise adopting subscription programs to entice people to use their vehicles — people who would otherwise not buy a personal set of wheels. This topic visited me when I picked up the latest issue of Time magazine last weekend, in which the publication lists down the “50 genius companies” in the world. Or companies that come up with “a creative solution to a problem.”
When I saw the cover, I wondered if at least one car company had made the list. Indeed, one vehicle manufacturer is included on the honor roll. No, it’s not the United States’ Ford or Tesla. It’s not even Japan’s Nissan or Toyota. And it’s definitely not Germany’s Audi or BMW. Earning a citation is none other than Sweden’s Volvo. A firm previously known for seat belts and air bags is now being recognized for its innovative business idea, and yes, it’s about the brand’s “Care by Volvo” subscription service. For about $600 a month, a customer may use the stylish XC40 subcompact crossover SUV. So for about P32,000 a month, one has access to unlimited use of a premium car.
The amount is not cheap, but consider the advantages. First of all, you can stop availing of the service if you get tired of the vehicle (or if you no longer need it). And perhaps more importantly, you don’t have to worry about paying for insurance and maintenance service. The only drawback I can think of is that you don’t get to own the car even after a considerable period of subscribing to its use — something I’m sure won’t fly with many Filipinos. We like bragging about our stuff, you see.
But then, think about all those car buyers in our market who default on their monthly payments and have their vehicle repossessed by the bank. That’s even worse, because they already paid a substantial down payment and have also presumably shouldered maintenance costs.
And that is why this subscription concept is presently being experimented with by premium brands (Access by BMW, Book by Cadillac, Mercedes Me Flexperience and Porsche Passport). Because it’s really designed for those who won’t flinch over the monthly fees and who don’t really care if they own the car or not.
Still, I hope the business model will eventually trickle down to mass-market brands. With the kind of traffic we have now and with the high costs of owning a motor vehicle, I really don’t mind just subscribing to a car I can give up anytime I want.