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Automotive retailers are adapting to consumer demand by offering personalised subscription offers to customers looking for increased flexibility and affordability.
Consumers are more conditioned than ever to products and services through subscription, with brands like Netflix, Apple and Amazon widely popularising flexible monthly payments for all elements of our daily lives.
This extends to areas like subscribing to vehicles themselves, as well as related services and products that companies like Assurant can offer, including extended warranties, service plans and breakdown cover.
Assurant is a Fortune 500 global insurance company with over 300 million consumers worldwide, 54m of which are through extensive partnerships with OEMs, automotive retailers and other distribution partners.
It has closely been tracking the growth in the subscriptions market globally, but also within automotive for many years.
The subscription market is growing hugely. A recent Forbes article mentioned the global subscription economy market size is projected to be $1.5 trillion in 2025, up from $650 billion in 2020.
Research by The Independent conducted amongst 2,000 people has found that they spent an average of £500 per year each year on subscription services.
To put that in a little more perspective for automotive retail, a paper by Straits research predicts it will be worth $38.4bn by 2031 with a 33.5% growth rate.
Sophie Jones, Assurant’s director of auto product development, said: “Customers are looking towards having everything personalised to them with a one stop shop.
“We’ve monitored consumer sentiment closely around subscriptions and we wanted to make sure that whatever we build, we’re focussing on what consumers want.”
Assurant’s own research has shown that nearly half of customers are interested in an automotive product bundle and the most popular services include the aforementioned extended warranties, service plans and breakdown cover.
Half of those consumers interested in a bundle were in the 18-30 years of age bracket. It points to a generational shift in how consumers’ expectations are changing and how they want to manage and pay for services in automotive.
Jones said: “We launched a subscription product called Vehicle Care 360, and we’re really excited to continuously evolve this solution with the customer at the heart of its design.
“We want to be able to provide more flexibility and choice to our customers, enabling them to pick those products which most suit their needs and lifestyle.”
Jones acknowledges this shift to introducing subscriptions requires retailers to adapt at the point of sale with how products are offered to consumers.
Assurant expects steady growth in automotive retail subscription services in the coming years and while they continue to do so, it’s likely this option will sit alongside more traditional term based offers.
Jones added: “A subscription product allows a great retention opportunity for dealers and recurring revenue benefits. These customers can be with them for the lifetime of that vehicle.
“There’s going to be a tipping point created by more disruptors joining the market, in addition to personalised finance and insurance subscription bundles that are going to accelerate this growth over the next five years.”
For more information about how Assurant can help evolve your consumer offering with its services, including its Vehicle Care 360 subscription solution head to www.assurant.co.uk/partner-with-us/vehicle-protection-services