Hyundai is reaching into the European market by rolling out its Mocean Subscription service, initially launching in Barcelona, Spain, this month. Subscribers will be able to rent cars for six months with the possibility of renewing the service and choosing a new car or returning the vehicle with a canceled contract. This move comes two years after Hyundai’s first subscription service in India, with the European service launching February 24, 2021.
Mocean Subscription will be an entirely digital process. Customers will be able to register online, choose their pricing plan and mileage package, followed by picking up their car from a nearby Hyundai dealership. Subscribers are guaranteed full service and maintenance of the car while under contract.
The Change in Consumer Behavior
The needs of car consumers are in constant rotation. Traditional purchasing and leasing options are starting to become less alluring. People are prioritizing ease and less maintenance. There’s a shift from cars being a long-term commitment to merely a mode of transportation and service.
Hyundai has already seen this develop with its customers in India. “People are now looking for mobility solutions without having the emotional quotient or attachment associated with ownership,” Brijesh Gubbi Suresh, Assistant Vice President and Group Head at Hyundai Motor India, told Autocar India.
Citizens of India are not the only ones looking for a change, which is what led Hyundai to expand into the European Mobility-as-a-Service (MaaS) market. “Our Mocean Subscription service has been tailored to meet current and future consumers’ needs,” says Ulrich Mechau, the Vice President of Sales at Hyundai Motor Europe.
The automotive industry will have to analyze this new trend in consumer behavior and adapt to the desired flexibility of subscription services. Volvo’s, whose subscription service is Care by Volvo, Håkan Samuelsson addressed this adaptation by saying, “Our customers’ expectations are changing rapidly. This means that Volvo Cars is also changing rapidly.”
Key Differences Between Car Subscriptions and Leases
Leasing is moving toward the rear-view mirror as the convenience of an all-inclusive monthly fee is becoming more attractive. There are distinct differences between leasing a car and subscribing to one.
Leasing has been more popular than financing a car long term because of its cost effectiveness. The lessee also avoids hassle from selling their vehicle and instead is moved into a new one every few years.
Car subscriptions are comparative to leases in the sense that there’s no personal ownership of the vehicle. The difference is that subscription costs include both insurance and maintenance of the vehicle, unlike leasing. Subscriptions are also often shorter, with more flexible terms and have a wider variety of vehicle choices.
Subscriptions and the Automotive Industry
Subscription models are a growing trend in the automotive industry. Several companies have developed subscription services for their United States consumers. Care by Volvo was announced in 2017 and offers a 24-month subscription with many features not offered through its traditional leasing option. Nissan Switch launched in 2020 in Houston and is continuing to offer a variety of vehicles with a two-tier program system. Even Tesla’s innovative CEO Elon Musk confirmed on Twitter a Full Self-Driving (FSD) subscription basis, fueling the auto-industry trends deep into the future.
Subscriptions are growing, but they’re still relatively new in the automotive industry. Flexdrive and Clutch Technologies were one of the first in 2014, though they weren’t necessarily automotive manufacturers. Those began experimenting with subscription services in 2017. Because the market is fresh, the exact flow of generated revenue is still relatively unknown. Volvo is one of the only to launch a subscription model in the United Kingdom, which the Swedish brand expects 20% of its revenue to come from by 2022.
Car subscription services are paving the way for opportunities across the globe. Now, it’s Hyundai’s turn to dip its toes in European waters.
Car Subscriptions Thrive in the European Market
Hyundai has seen positive feedback from car subscriptions with their service in India because of the increased desire for flexible ownership. The company’s group head, Suresh, said, “When we see the numbers for Hyundai subscriptions, they are very encouraging.”
The company’s expansion into the European market begs the question: will European buying habits become profitable for Hyundai?
Car subscriptions are becoming increasingly popular in Europe, with a projected hold of 20% of shares in the automotive subscription market by 2026, according to Global Market Insights, Inc.
Companies that focus on expanding their innovative automotive subscription services will generate a recurring revenue stream that reflects directly on their customer retention and satisfaction. By branching out to Europe, Hyundai is able to stay on top of consumer trends and grow its brand. “This innovative offering illustrates that we are not just manufacturing and supplying cars, but also providing smart mobility services,” says Michael Cole, President and CEO at Hyundai Motor Europe.