If we can subscribe to music and TV, why not mobility? That’s the question car subscription schemes are asking. A pioneer in car subs in Malaysia is TC Euro Cars (TCEC), the Renault distributor. The idea of car subscription taps into humans’ desire for freedom, specifically the freedom from commitment. Think of it as dating, versus marriage.
As opposed to the traditional way to have a car in your porch – which is the classic hire purchase loan with you as the “owner” – Renault Subscription allows you to essentially “rent” the car full time. The promise is no downpayment, no long-term commitment, no worries about depreciation and no servicing costs to think of. Just pay and drive. Freedom is the buzzword.
Ride hailing (Grab) and on-demand car rental (Socar) are also alternatives to traditional car ownership. While those services are great and fit some lifestyles to a tee, you’re always at the mercy of driver availability for the former, and car availability/location for the latter. When you want to achieve maximum time efficiency and have full control of your schedule, nothing beats having your own set of wheels on standby, 24/7. That’s something even the biggest ride hailing fan cannot disagree with, surely.
Some of us might not realise it, but many in the younger generation are not as hung up on owning things such as a car and house, preferring instead to spend money on experiences and learning. With car subscription, Renault and TCEC are catering to such lifestyles.
“Our principal Renault believes that moving forward, this (car subs) is definitely an area of growth. In a lot of developed countries, the market is getting very saturated. People spend their money on experiences, to enjoy the things that they really want to enjoy,” said Wong Hoe Mun, CEO of TCEC.
“They don’t want to be bogged down by long term commitments, and worry about depreciation, and in the West, the depreciation rate is even worse. Moving forward, we definitely believe that this is an area of growth. Eventually more and more players will be coming, so we want to ensure that we’re first in this space,” Wong added.
Just drive, that’s the promise
Here’s how Renault Subscription works. There are two plans – Fixed and Switch – and all models in TCEC’s local range can be had via subscription, including the Renault Megane RS hot hatch. The Fixed plan is pretty straightforward. Sign up for a one-year or two-year plan, with the longer term plan costing you less per month, naturally. For the Captur, it’s RM1,499 per month for a year vs RM1,299 for two years, for instance.
The Koleos SUV is available from RM2,299 to RM2,899 per month, depending on tenure and spec, while the Megane RS will cost you anything from RM3,999 to RM6,299 per month. There’s a three-year package for the RS hot hatch, in addition to the one- and two-year packages available across the board.
Fixed plans – click to enlargeUnlike buying a car, there’s no downpayment involved here, just a refundable security deposit (RM2,500 for the Captur). Every subscriber will get a newly-registered car and the annual mileage cap is 20,000 km, which works out to 1,667 km per month. That should be fine for most urban commuters, but should you need more miles, TCEC sells a “top up” of 10,000 km per year for an additional RM200 monthly. At the end of your subscription term, any excess mileage will be charged 50 sen per km.
Subscribers need not worry about road tax, insurance or service costs – all are included in the package and the real owner of the car – remember, it’s not you, but TCEC – will take care of those.
What’s not included in the Fixed package are wear and tear items. Wong believes that wear and tear costs will be minimal, given that all subscribers will be given brand new cars. However, if you want ultimate peace of mind, two-year plan customers can top up RM100 per month for full coverage, which includes brake pads, wiper blades, tyres and alignment/balancing. (excluding Megane RS).
No extras, just the monthly fee. “For a lot of customers, when they own a car, they forget, they don’t budget (the extras), they just think ‘every month I need to pay RM1,200’ and they have just enough money for that. All of a sudden they realise that road tax and insurance is due, and more funds are needed,” Wong said, stressing on the no-hassle, just drive part of subscription.
Subscription would also work well for those who need a car full time, but for a short term. Say you’re being posted somewhere within Malaysia for work and need a car for a year or two – subscribing would then be more convenient than buying a car just to use it for a short period.
Switch plans – click to enlargeAdding spice into the garage
Another novel thing about Renault Subscription is the ability to call upon another Renault model when you need it. The Switch Plan is a single year plan offering you a Captur, but with access to the Koleos SUV and Megane RS.
Say, you need to balik kampung with the family during the festive period, the tall and roomy Koleos would do a much better job than your daily ride. Clearing annual leave and have some “me time” to burn? Go somewhere and reignite your passion for driving with the Megane RS. A car for every occasion? With a compact daily runabout, a big SUV and a fun driving machine to call upon, this comes pretty close.
There are two one-year Switch plans – Base and Prime, priced at RM1,999 and RM2,199 per month, respectively. Everyone gets a Captur – the Base subscriber gets two months of “Renault family access”, and from there, the Megane RS can be yours for two weeks. Pay for Prime and the time away from the Captur increases to four months, with four weeks of those being Megane RS days.
Usage of the Koleos and Megane RS are in 14-day blocks, and bookings have to be made minimum 30 days in advance. Availability of these fleet cars are on a first come, first served basis, so it’s best to submit preferred dates early. Subscribers can start tapping into the Koleos/Megane RS fleet one month after the subscription start date.
Access to other models aside, the benefits of Switch over Fixed include unlimited mileage and the freedom to cancel anytime, as long as 30 days notice is given. The monthly fee difference between Switch Base and a one-year Fixed plan is RM500, and so far, 10% of Renault Subscription members have opted for the extra flexibility.
So, if car subscription is akin to dating without the obligation of marriage, then is the Switch plan that, plus two part-time lovers on the side? This lifestyle isn’t for everyone, but those who enjoy a bit of variety every now and then would surely appreciate the change of scene. Before you censure this writer for suggesting immorality, isn’t this the Tinder era we’re living in?
Try first, commit later
Staying on the theme, Renault Subscription could be a good way to sample Continental cars in general and Renault in particular, without taking the plunge and buying one. Generally, Malaysian car buyers are a conservative lot, often putting their money in what’s perceived as safer bets, the supposedly tried and tested known quantities. Renault definitely isn’t in this category.
As with other “cold door” cars (direct translation from a Cantonese term that means not high in demand), common worries include low resale value and perceived poor reliability. Wong concurs, but points out that the RV issue isn’t as one sided as before.
“True, I’m sure you would have noticed comments from customers – especially when it comes to Continental brands – that they’re worried about resale value. But these days, other brands – Japanese and Korean – also have this same problem, because OEMs are giving off huge discounts. That affects resale value. It’s the same for Renault; we have the same problem, maybe greater.
“By doing subscription, we allow customers to come in at a lower barrier so they dont need to be worried about RV at the end of the two, three years. That issue of ‘what do I do, I would like to change cars but I still owe the bank more than the car’s RV’ will be eliminated,” he declared.
The TCEC boss revealed that Renault cars, with their expressive French design, draw in many interested parties at roadshows and events. “The crowds are there, the customers are keen, they like the design, people are emotionally attracted to these cars.” However, it’s when the head takes over from the heart – so to speak – when the rational side asks a few questions, the case for a Renault usually gets weaker. Often, feedback from family and friends serve as the final blow to kill off the idea.
“By having subscription, it allows customers to drive for up to two years with no strings attached, just enjoy. Only when you’re happy with it – really love owning a Continental car, a Renault – then you can choose to buy a new one, or continue subscribing. Maybe you’re emotionally attached to the car after two years, you can even buy the same unit. We’ll work out a price for you based on the market value at that time, or the new car price minus what you’ve paid in fees, whichever is lower,” Wong said.
Click to enlargeSounds like a no-lose deal, right? Which led us to ask: in pure ringgit and sen terms, which is better value for money – purchasing or subscribing?
“Purely money, and if you utilise all the programmes we have for the Captur – trade-ins and the Renault Honour Programme with its guaranteed future value – it’s actually more worthwhile to buy,” Wong said.
However, he pointed out that the Honour programme has conditions (must upgrade to another Renault) and there are many plus points for subscription that can’t be valued in numbers, such as the all-included convenience and the ability to just walk away at the end of the tenure. Also, Renault Subscription allows one to choose a price that suits his/her usage. If you buy a car, you’ll be paying a fixed amount every month, regardless of how much you use it.
“For subscription, the consumer needs to determine what he actually wants, what’s his usage and for how long. Say he wants to use the car for two years, doesn’t travel a lot, and is not a heavy user, then he can opt for the no frills package with a basic 20,000 km limit for a better price. But if a customer is undecided – let’s say he’s in sales and travels a lot, or can’t commit to a fixed period, maybe gets relocated by the company – if you’re that, Switch is for you.
“Of course, if you can plan what you want upfront, then you get to enjoy lower rates. With this mix and match type of system, you can enjoy a price that suits your requirements – not more not less. If you buy a car, whether you use it only once a week, you still pay the full amount; with subs, we’re more flexible in terms of usage,” he said.
To each his own
Interestingly, despite the innovation behind this newfangled form of car ownership, the profile of the customer opting for Renault Subscription isn’t significantly younger than the brand’s regular clientele. For sure, it’s not the typical Netflix/Spotify crowd that TCEC first envisioned.
“People who are into subscription services are generally younger, but what we’ve seen over the last four months, which has surprised us, is the traditional carbuyer that you see everyday. Slightly younger, with a median age about five years lower, but overall, still the same profile, those in their 50s, families above 40,” Wong shared.
Which begs the question: will subscription eat into Renault’s normal sales? The TCEC boss admitted that cannibalisation was a serious concern when they launched the programme.
“When we started this, we were very worried that it might affect our normal sales, but actually it didn’t. The customers who wanted to buy – and there are a lot of old school, traditional mindset people who want to own the car, to say ‘it’s mine, I have the asset’ – this group of people is still there.
“But subscription allows us to lower the barrier. We get to attract more people to come to Renault, and now they have a different way of ownership, a different way of enjoying the car without full commitment. We get more people and a larger pool,” Wong said, while maintaining that the hire purchase route remains worthwhile thanks to good overtrade value, guaranteed future value and five years of free maintenance.
This is not a drill
It’s pretty clear that TCEC is serious about subscription – this is not an experiment and will be a permanent fixture for the company moving forward. In fact, Wong expects more brands to join the fray in the future. New features and packages are on the cards, but for now, the Renault distributor’s challenge is awareness and education.
“We believe that once the customer is familiar with these benefits and they start to enjoy it, it’ll be quite difficult to go back to the traditional business model (of buying cars). In short, subscription is like a long term trial. You pay for usage, which is fair because you’re using the car. It’s like being in a relationship, followed by a (marriage) registration with a proper tea ceremony. Isn’t that a good deal?” Wong joked.
We both laughed, but there’s nothing funny about car subscription, which is a serious proposition.