Between buying or renting vehicles, what would be the best option for managing light fleets? Well, like most of life's choices, it all depends on the applied context and other information.
Ultimately, both vehicle ownership and leasing offer benefits, but they can also create barriers to managing light fleets. Therefore, to try and overcome these disadvantages, both for owned and leased fleets, a new type of fleet has emerged: one composed of car subscriptions.
It is exactly what it seems: a subscription service (recurring and renewable) where the product offered is a vehicle . It's like streaming services — Netflix , HBO Max , Prime Video , among others — but instead of acquiring access to a platform and the content and media available on it, your fleet management company acquires the use of a car.
Read more: Fleet management: prepare a good plan for 2023
Well, with all this, you must be wondering: but how does this really contribute to fleet management? How is it different from car leasing?
To help you understand all this and much more about this type of fleet on the rise, we have gathered the main information on the subject in this article. Enjoy:
What are subscription cars?
What are the differences between buying, renting and signing vehicles?
How do subscription cars work in fleet management?
Advantages and disadvantages of subscription cars in fleet management
What are subscription cars?
As you may have already noticed, the car subscription service consists of contracting the use of a brand new vehicle for a period of time and at a price previously determined in a contract.
That said, this vehicular subscription service, which is already present in much of the world and more recently in Brazil, can vary in periods of 12, 14, 18, 24 and 48 months, with supplier companies extending the contract to up to 5 years.
Thus, the longer the contracted subscription period, the lower the price paid — as is generally the case with subscription services, where annual packages are cheaper than paying in 12 monthly installments.
As services have become increasingly recurrent in the economy as a trend of the digital age, subscription cars have found fertile ground for their growth, even in a period of economic recession and a decrease in the population's purchasing power.
According to data from the Brazilian Association of Car Rental Companies (ABLA) , the car subscription sector in Brazil already accounts for 8% of the car rental market , with trends indicating that this percentage will increase even further.
Thus, in the face of this surge, companies like Renault , Volkswagen , and Audi are already offering the service.
What are the differences between buying, renting and signing vehicles?
Well, so that you can better understand what differs these types of fleets — by own vehicle, rented or by subscription — we separate the definition of each one, check it out:
- Own fleet: concerns vehicles purchased and belonging to the company that will use them. Therefore, all bureaucracy, such as IPVA, documentation and other things, are in charge of fleet management. However, the company has more control over its operations and processes, but also ends up with higher expenses for maintenance, taxes and other vehicle expenses that are under its responsibility.
- Leased Fleet: unlike the previous model, the leased fleet has lower costs, as maintenance and other amounts are already included in the contract. However, companies have less control over operations in these situations, which can affect productivity and the quality of the service performed.
In addition, each rental company has its charging methods, but generally, you choose the mileage allowance and, if you exceed the KM limits to drive, there will be additional charges. - Subscription fleet: in the same direction as the leased fleet, but with different conditions and benefits, subscription cars have a longer contract in relation to the period that the company has the chosen vehicle, ranging up to 5 years in some places, as in loop.
In addition, when acquiring cars by subscription, the bureaucracy is even less than in the leased fleet, not to mention that prices are reasonably lower and the contracting company gains flexibility, maintenance and assistance on the roads.
Read more: Own fuel station in fleet management: is it worth it?
How do subscription cars work in fleet management?
To explain how car subscriptions work in fleet management , we asked Aceena — a Golfleet partner company specializing in car subscription services — to explain a bit about how vehicle subscriptions work within their company. Take a look:
- What are the contract period options?
Aceena works with subscription contracts that vary between 12 and 48 months, depending on the needs of each client.
In addition to the term, there are different types of coverage, for example, maintenance, which can be preventive only, or complete (preventive and corrective – we explain this in this video: Be careful with your car's maintenance coverage by subscription! ).
In addition, additional services such as a spare vehicle for maintenance and claims, in short, various configurations for different contracts.
Our mission is to help consumers choose a subscription plan that meets their needs.
- The longer the time, the higher the value?
In general, yes, but it depends a lot on the mileage to be hired. The pricing of a lease agreement takes into account several factors, among them and, citing the main ones, we have:
- maintenance costs
- Tires
- Depreciation
- claims coverage
- Cost of invested capital
- Residual value
- Among others
Therefore, we know that the greater the mileage, the greater the cost of maintenance and tires, and this period and kilometers also impact the depreciation of the asset and, consequently, the monthly fees.
Read more: How to develop a fleet maintenance plan and ensure greater operational safety
Thus, there is a balance point in this equation that needs to be evaluated at the time of hiring.
The calculation is not so simple, when we talk about Residual Value, many variables must be taken into account, such as the life curve of the product, that is, if a certain car will undergo a design change, restyling, or even discontinue production, policies purchase prices, inflation and regulations, in short, a very complex and important formula in the leasing model, which explains the difference in monthly fees between models of the same category.
Therefore, we know that a proper fleet policy and cost management are necessary to mitigate the risks involved in this modality, both for corporate fleets and individual vehicles, and the use of telemetry has provided important data and control in this process.
Read more: The difference between cost and expense? Learn how to classify them.
- Does the company bear the costs of all vehicle bureaucracy?
This is also an important point: in addition to the costs mentioned above, there are licensing, documentation, IPVA (Brazilian vehicle tax), and accounts payable management costs. In other words, the services related to the vehicle are managed by the rental company, the costs are paid by them, and the consumer doesn't have to worry about keeping track of deadlines and payments; everything is included in their monthly fee. And, if there is an additional charge, such as a traffic fine, the rental company manages the entire process, identifying the driver, paying the fine on time, and sending an invoice along with the vehicle's monthly fee.
All of this brings great convenience and control to consumers.
- Any benefit, important information or differential of the service?
We have over 25 years of experience in the Brazilian fleet market, and our operation was built with the consumer, the vehicle user, in mind. Therefore, we add extra services to our products, such as helping our clients sell their used car to facilitate the transition to a car subscription service , offering a pick-up and delivery service for maintenance, after-sales support with clarification of doubts, technical analyses, and other customer care to guarantee an excellent experience with their subscription car.
Read more: Vehicle decommissioning: how to do it in fleet management
We emphasize that we are not just a rental company, we have partnerships with the main rental companies in the country, and in addition, we also manage rental companies that need to offer a quality service to customers, through a solid and structured operation.
To learn more about how we work, visit our service channels on social networks and youtube:
Advantages and disadvantages of subscription cars in fleet management
Now, so that you can make the right decision for your type of fleet, we list the main advantages and disadvantages of subscription cars in fleet management:
Advantages of subscription cars
The highlight of subscription cars is the practicality of this format, which minimizes the challenges and costs involved in using a good vehicle. Thus, the main benefits of this modality include:
- Simplicity: With a subscription car, you cut all the bureaucracy of fleet management related to the vehicle, so you don't get stressed with IPVA, licensing, transfers and the like. Just sign the contract and pay the established amount.
In addition, it is also simpler to increase your operations and increase the reach of your fleet, as all you have to do is sign new vehicles. - Agility: As you know, purchasing vehicles can take some time, even more so if the desired model is not available. In this way, with subscription cars, you already have a reasonable number of units available that will be ready for use in a very short time.
- Tranquility: in addition to not having to bear the cost of conventional insurance, you also don't have to worry about the origin, as subscription cars are usually 0 km. Not to mention that demobilization is no longer a problem, since you won't need to sell the vehicle, for example.
Disadvantages of subscription cars
As you've seen before, everything has its pros and cons. That said, we also separate some costs from subscription cars:
- Company property: just like in rented fleets, in subscription cars the company does not own the vehicle, that is, the payments made by the fleet management financier are not used to settle a loan, for example, since you are only paying for the use of the vehicle.
- Limitations: Another aspect similar to renting a vehicle is the limitations on vehicle operations and customization, such as stickers, cosmetics, other components and equipment.
But even with these disadvantages, it is essential to weigh the pros and cons on a scale to see what really makes sense for your fleet management and what will best benefit you.
To understand more about this and ensure that you, as a fleet manager, are making the right decisions, access our successful manager checklist:
