I recently wrote about how car companies are moving to a new car buying model as a subscription service. Recently Nissan announced that they are adding their name to the list of companies with a subscription service. Does this signify the beginning of subscription services for cars or will we stick with standard purchasing and leasing?
Subscribing For a Car
Nissan is joining the list of companies that offer a subscription service for their cars. The service called “Nissan Switch” works how you would expect, pay a monthly fee which will allow you to drive a car of the company. The subscription fee includes delivery of the car, cleaning, roadside assistance, maintenance, and insurance.
There are two tiers to choose from, Select and Premium. With the Select tier, it costs $699 per month. The vehicles you can choose from in this tier are the Altima, Rogue, Pathfinder, and Frontier. The Premium tier costs $899 per month. You can choose from the LEAF PLUS, Maxima, Murano, Armada, TITAN, and the 370Z. On top of the monthly payment, there is a membership activation fee which is $495.
Why Subscribe Over Leasing and Purchasing
With the way the economy is going right now, there seem to be fewer people buying cars. Who could blame them, having a car note on top of other monthly expenses can put people in a bad position. This is especially true for millennials as they go through life. Having a subscription to something you can cancel at any time is a well sought out service.
Car companies know this and want to bring in more customers by catering to their needs. When buying a car you have to consider not only the car note but also the car insurance and maintenance. A subscription service can get rid of the worry of having to keep track of that by including it in the cost of the service. This is the strength of a subscription service over purchasing or leasing.
Trial Based on a Small Scale
As with most companies trying out this method, Nissan is doing this only in the Houston area right now. This is the smart way to start out to see if the service can be implemented on a larger scale. Nissan is a popular brand, with solid car models in the sedan category. They are not the most expensive and provide a quality build to their vehicles.
The possibilities for a car subscription service to be the next big thing is possible. However, the prices for these services has me worried if young adults are really going to go for this as much as the companies would want them to. It is enticing to see the insurance and maintenance included in the service fee, but for some folks, it might not be worth it. We still have the growing rideshare services in Uber and Lyft; while also public transportation is a staple within certain communities.
It’s almost hard to justify paying that much money when there are cheaper and potentially more efficient options out there. The more companies that add themselves to the mix, however, will cause the competition to be more competitive to draw consumers in. We will see what impact Nissan can make in this growing trend if they can.