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.
After all, both the acquisition and the leasing of vehicles present benefits, but they can also cause barriers for the management of light fleets. So, to try to overcome these disadvantages, both in the own fleet and in the leased fleet, a new type of fleet appears, the one composed of subscription cars.
This is really what it looks like: a subscription service (recurring and renewable) in which 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 contents and media available on it, your fleet management 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 have already noticed, the subscription cars consists of contracting the use of a brand new vehicle for a time and values previously determined in the 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 Brazilian Association of Car Rental Companies (ABLA), the sector of subscription cars in Brazil already occupies 8% of the car rental market, with trends to further increase this percentage.
So, in the face of this explosion, companies like Renault, Volkswagen e Audi already offer 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 filling station in fleet management: is it worth it?
How do subscription cars work in fleet management?
To explain how subscription cars work in fleet management, we ask for the Aceena — partner company of Golfleet and specialist in subscription car services — to explain a little about how the car subscription works in the company. Just 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 just preventive, or complete (preventive and corrective – we explain in this video: Beware of subscription car maintenance coverage!).
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 prepare a fleet maintenance plan and ensure more safety in operations
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 correct fleet policy and cost management is necessary to mitigate the risks involved in this modality, both for corporate fleets and individual vehicles, and the use of telemetry has brought important data and control in this process.
Read more: Difference between cost and expense? Know 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 the costs of licensing, documentation, IPVA, in addition to the management of accounts payable, that is, the services related to the vehicle are managed by the rental company, the costs are paid by it, and the consumer does not worry about controlling terms and payments, everything is included in his monthly fee, and, if there is an additional charge, such as a traffic fine, the rental company manages the entire process, indicating the conduit, paying the fine on time and forwarding a charge, along with the vehicle's monthly fee.
It all brings great convenience and control for consumers.
- Any benefit, important information or differential of the service?
We have more than 25 years of experience in the fleet market in Brazil and our operation was built with the consumer in mind, the vehicle user, which is why we add extra services to our products, such as, for example, we help our customers sell their used car to facilitate the migration to a subscription car, we have Take-and-Traz service for maintenance, post-sales support with clarification of doubts, technical analysis, among other care to our customer to guarantee an excellent experience with the signed car.
Read more: Vehicle demobilization: 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 be sure that you, the fleet manager, are making the right decisions, visit our Success Manager Checklist:
