Car subscription offers: how do they compare to a PCP?

As car retail sector experts predict that subscriptions could take over from PCPs as the most popular way to fund a private vehicle, AM compared Q4's offers to see how they compare.

While there is no real hard data available on how big the UK’s vehicle subscriptions market has become, it would have to take up more than 90% of retail car finance in order to become more popular than personal contract purchase (PCP).

That’s a big ask, but Wagonex boss Toby Kernon, told AM that “stranger things have happened in other industries,” clearly referencing the rise of services such as Spotify and Netflix.

There are clearly differences between streaming service subscription rates and hundreds/thousands of pounds to secure a shiny new, or nearly new car.

Subscriptions 'cannot match' PCP value

Care by Volvo, the Swedish brand’s subscription offering, says it has represented 15% of all retail sales in its first year. All subscription prices with Care by Volvo include servicing, roadside assistance, vehicle excise duty, wear and tear cover and the ability to switch vehicles after a minimum of three months.

The most popular subscription model has been the XC40 and it is priced from £589 a month if you commit to a long-term, three year contract, not dissimilar to a personal contract hire (PCH) offer.

The price shoots up to £719 a month if a customer chooses the more flexible option of three months. This compares with £399 for an XC40 plug-in hybrid on PCP over 48 months.

Most consumers are not looking at breaking down their motoring costs across the extras Care by Volvo is bundling in per month, but there’s a £320 gap between the two. That’s almost double the price for the flexibility of switching after three months, as well as gaining access to those added extras.

An AM100 dealer boss that preferred not to be named said there is no current subscription offer in the UK that can match PCP for value.

Jaguar Land Rover’s Pivotal works on the idea that customers can switch their car every six months.

Customers have to pay a one-time joining fee of £550 and there are four bands of subscription that grant access to a different set of JLR models.

The F-Pace and Discovery Sport are available at £850 a month for a minimum of three months.

Customers have to pay a charge of £250 if they switch after three months and can’t wait until month six. Extras in the subscription package include maintenance, vehicle tax, roadside assistance and fully comprehensive insurance.

On PCP, JLR customers can get access to the F-Pace for £479 or the Discovery Sport for £499.

Emerging players

Looking outside the vehicle manufacturer options, there are platforms like Wagonex that help dealer groups or leasing companies enable subscriptions on their fleets of vehicles.

Prices are set by the vehicle owner and there are options available right now for a Nissan Leaf from £418.80 for customers that commit for 12 months. Extras include delivery, roadside assistance, road tax, maintenance.

A Leaf on PCP costs £290 a month.

EV subscription specialist Onto has models like the Renault Zoe from £389 and customers only have to commit for one month at a time.

Charging is included in the price and there’s a mileage limit of 1,000 a month.

The business has seen active subscribers double in the last few months alone, with 6,000 now active in the UK.

A Zoe on PCP from Renault is priced at £249 a month, so there’s only a £140 premium per month for the flexibility on offer.

Anecdotally, a relative who recently took the plunge with a Zoe subscription to test the waters of living with an EV described it as “expensive, but the service has been impressive so far”.

The industry has a lot of room for innovation in the retail finance, leasing and subscription space and it will be interesting to see if other platforms look to muscle in and potentially leave the traditional manufacturers and retailers behind in 2022 and beyond.

Compared: Q4 2021's car subscrition and PCP offers: