With the recent announcement that elmo has ceased operations of their vehicle subscription offering in the UK, today we’re going to have a look at speculative reasons why some providers just cannot make it work.
The automotive industry over the last couple of years as seen a burgeoning trend of car subsription services. These services promise flexibility convenience and a hassle-free free alternative to traditional car ownership.
However, behind the glossy marketing campaigns, sponsorship deals and promises of seamless mobility lies a tumultous landscape categorised by financial strain and shifting market dynamics.
As some car subscription companies have stumbled and fallen, it’s imperative to understand the factors contributing to their downfall, even as others continue to thrive and survive.
Financial Strain
One significant challenge facing UK car subscription companies has been financial strain, exacerbated by various factors. Higher interest rates have made financing vehicles costly, putting immense pressure on bottom lines. The financial burden has been particularly challenging for subscription companies operating on thin profit margins.
Companies have felt the pinch with some exiting the UK market due to financial diffculties or other companies requiring cash injections to ease operations.
Market Shifts
The automotive industry in general, has undergone significant shifts, none more impactful than the rise of electric vehicles (EVs). However, the strong drop in residucal values of EV’s, partly due to Tesla’s aggressive pricing strategies, has posed challenges for subscription services, especially those that were heavily invested into electric only vehicle fleets.
Jaguar Land Rover’s Carpe, launched in 2018, aimed to captalise on the growing demand for electric mobility. However, it was discontinued in 2020 as the company restructed operations, eventually the service was re-launched under the Pivotal brand.
Subsidised Pricing
Some vehicle subscription companies resorted to subsidised pricing strategies, using funding rounds and investments to artficially lower subscription monthly prices. While this may attract customers in the short term, it can lead to an unsustainable business model and distort market perception.
DriveNow, a car rental service, merged with Car2Go in 2019 before exiting the UK market in 2020. Alphabet’s AlpaCity, another casulty, was discontinued in 2019, these companies fell victim to the pitfalls of relying on unsustainable pricing strategies, unable to weather the storm of market competition and financial realities.
Continued Success Amidst Challenges
Amongst the failures, there are shing examples of UK car subscription companies that continue to strive, digging their feet in the sand to show that what they are actually doing works without the need to attract custom is pricing that just won’t work.
Companies like Cocoon Vehicles, Mycardirect, Volvo Car Subscriptions and Flexed have navigated the challenges of the subscription model with resilience and innovation.
Cocoon Vehicles with its focus on customer-centric solutions, has carved a niche for itself in a competative market. Mycardirect’s commitment to transparency and flexibility has endeared it to customers sekking hassle-free mobility solutions, Volvo (formally Care by Volvo) has evolved into what it is today with the backing and reputation of the Swidish Automaker, setting the standard for premium subscription services.
The Future
The rise and fall of car subscription companies offer valuable lessons for the automotive industry. While financial strain and market shifts post formidable challenges, resilence, innovation and adaptability remains the key to survival.
As companies navigate the evoloving landscape, those that proiritise sustainability, customer-focus and strategic partnerships are poised to survive.
Car Subscriptions are here to stay for the foreseable future, esepcially in the modern world of You’ll own nothing and be happy!
Disclaimer
This article has been written mainly on speculation of the market place, taking feedback from important figures in the car subscription industry either present or past. Some of the information has been provided from data found on other websites as part of our research. We are not responsible for any incorrect information and you are able to let us know if any of this article requires correcting,
List of car subscriptions providers who no longer exist
Drover
Drover marketed itself as the UK’s leading independent car subscription service for consumers, Cazoo acquired Drover in December 2020, See Cazoo.
Cazoo Car Subscriptions
Cazoo aqquired Drover and hoped to push their subscriber numbers up utilising stock built-up in Cazoo’s inventory. Cazoo announced that it was axing the subscription model in November 2022 to release equity in the current vehicles.
elmo
A recent casulty of the electric vehicle residual value market, elmo whilst being part of a larger group wound up it’s subscription service in March 2024 after months of “coming soon” labels across it’s vehicle database on the website.
Jarmite
Jarmite seemed on the surface to have the processes in place to manage a large fleet of sub-prime no credit check car subscriptions, but the website shut suddenly without a trace and the company dropped into insolvency.
ONTO
ONTO entered administration in September 2023 blaming the “Steep fall” of electric vehicles. Their fleet had grown to a massive 7,000 vehicles and their subscription included insurance, breakdown cover, public charging, etc. Along with no deposits, very little credit checks and the option to swap your vehicle on a regular basis.
ONTO was a company that heavily relied on funding to help expand it’s fleet but the numbers just didn’t stack up.
Northern Vehicles
Northern Vehicles racked up a large amount of debt due to their vehicles being marketed to the sub-prime customer base, including a large amount of vehicles to a company in Manchester connected with crime. They were re-imagined as NVG but lessons hadn’t been learnt and the new company ended up as the first.
Fair
A car subscription service that offered flexible terms and all-inclusive pricing. In 2020, Fair exited the UK market due to financial difficulties.
DriveNow
While not exclusively a car subscription service, DriveNow offered flexible car rentals in several UK cities. It merged with Car2Go in 2019 and then exited the UK market altogether in 2020.
