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Is this the future of car ownership?

Is car subscription the way of the future?

We all know about ride-sharing, where you might make a new friend as you share an Uber to the airport. But what if you prefer your own space and also like to drive? Good news: companies are embracing short-term car-sharing in Australia, with new subscription options popping up around the country.

The premise for car sharing, or subscription services, is pretty simple. Instead of taking on the burden of a car loan and having to cover all the costs yourself, you instead pay to use a car without the need to worry about insurance, fuel, registration or servicing. The costs might work out higher than a finance package or lease, but you get the freedom of being able to opt out if your circumstances change.

GoGet has been playing in this space for a while now, and there are thousands of GoGet car-sharing pods across Australia for users to take advantage of. Users can rent a hatchback, sedan, convertible, ute or van for a day or even just an hour.

The pricing structure for GoGet requires users to have a membership to drive. There are multiple tiers depending on your expected driving patterns - GoStarter, for people who just need a car on very infrequent occasions, GoOccasional for those who need a second car at times, and GoFrequent, for those who use the car-sharing service in favour of owning their own vehicle.

All of the plans are relatively affordable. For example, the GoOccasional plan costs $12 per month, with car rental from $9.70 per hour with an additional rate of $0.40c per kilometre travelled, or a cap of $81 per day with 150km included travel.

Another player in the subscription landscape is Carly, which offers a "Netflix" style subscription. The company charges you in 15-day intervals, and you can change your car on a monthly basis - that's great if you have varied needs from your transport. Carly sells the benefits of this style of ownership - what if you want to take a long holiday? Why should you be stuck paying off a car that is parked at your parents place while you backpack through Europe?

Another company offering car subscription services in Australia is CarBar. Another company offering car subscription services in Australia is CarBar.

Most of Carly's cars are late model vehicles, with the cheapest on the site at the time of writing being a 2017 Hyundai Accent at $168 per week. There are more than 240 cars on the Carly website, ranging from budget hatchbacks to luxury people movers.

"Subscription is an alternative," said Chris Noone, head of Carly Australia when the service launched in Australia in April 2019. "If you want to buy a car, then you need to spend a few days going between dealers, and you can either save up the full amount, or you can take out a loan. And lots of people are actually not getting credit applications approved.

"With a subscription, you don't need to do that. And there's research from the rest of the world that shows the younger generations aren't that keen on entering into long-term financial commitments," he said.

Another established player is Maven, a General Motors Holden subsidiary brand that helps get people into Holden cars at a fraction of the cost of buying and owning one. According to Holden, Maven has more than 6000 active members using a fleet of 2300-plus vehicles. There are Trax small SUVs, Commodores, Equinox SUVs and Colorado utes available.

Indeed, Maven also offers the Maven Gig option, which allows you to rent a car for a set rate per week, but also allows you to run that car as an Uber ride-share car. The theory is that users will be able to earn money while having the flexibility of not being locked into a finance contract and the peace of mind of having major costs covered. The minimum term for this type of loan is 28 days. Wondering why your Uber driver has collected you in a relatively new Holden? That'd be the reason. Holden says that there have been an estimated nine million ride-sharing trips in Maven vehicles, and more than 200 million kilometres covered in Holden Maven models.

Dealerships are getting in on the act, too. It may seem counterintuitive for car dealers to want to loan cars rather than sell them, but according to Paul Higgins, co-founder and managing director of subscription services HelloCars and Blinker, a drop in new car sales will actually be a positive.

"A number of factors are contributing to the growing number of customers opting to subscribe rather than finance or buy, including the update in electric vehicles, the number of customers unable to obtain finance in the wake of tightening lending restrictions, the uncertainty in the current housing market, and the changing consumer sentiment toward flexibility and the subscription economy," said Mr Higgins.

"Based on these factors and the current performance of the automotive industry which is currently experiencing a 19-month sales slump, and current growth within the business, it wouldn't be extraordinary to suggest car subscription will represent 20 per cent of cars on the road by 2025."

According to Mr Higgins, HelloCars attracted 100 active subscribers in the first 3 months, with entry-level cars and family SUVs proving popular.

Another company offering car subscription services in Australia is CarBar, which allows you to choose a car, then a plan, then choose if you want to collect it or have it delivered, and you can cancel or switch with a fortnight's notice. Indicative prices suggest rentals from as little as $119 per week for an economy hatchback, but there are plush luxury SUVs, too (at a rate of about $509 per week) if your taste (and budget) changes.

The subscription model makes a little less sense if you're signing up for a long-term loan - you could still spend in excess of $10,000 in a 12-month period, even if you sign up for an affordable small car. You might be okay with that - but make sure you do your research if you're thinking a car subscription is a cheap way out of owning a car.

Car manufacturers are also looking to get into the subscription game, with Volvo looking to run its Care by Volvo plan due to launch in late 2020.

Ford has the innovative 2nd Car plan, too, which allows owners of new Ford models to have access to different cars depending on their needs. Own a Ranger but want to run around in a Mustang for a while? If you pay a $500 enrolment fee you can borrow one for a week at no cost. The pricing structure varies based on the car you purchased (a Focus owner has to pay $375 for a Mustang for a week, for example).

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