Mahindra & Mahindra (M&M) on Thursday launched a subscription-based service for its select SUV (sports utility vehicles) models in a bid to target the younger generation of customers who give preference to experience over ownership.
The initiative in partnership with Revv Cars comes a year after the company introduced leasing for retail customers through a tie-up with Orix.
M&M joins automakers such as Nissan Motor India, Tata Motors, and Volkswagen which offer subscription for select models on the Zoom Car’s platform as they seek to tide over the structural shift witnessing the car market.
After cab aggregation, subscription and self-drive cars are expected to emerge as prominent trends in the shared mobility space. Amid rising ownership costs and an upwardly mobile lifestyle, the new-age car owners are looking for a hassle-free access to ownership, instead of being saddled with a financial burden.
“We have been exploring multiple ways by way of which we can get people to explore our brands,” said Veejay Ram Nakra, chief of sales and marketing, automotive division, M&M, in a conference call.
With this flexible and affordable offering, M&M hopes to help its customers fulfil their aspiration of driving their desired vehicles without necessarily owning them. This, in turn, will also attract a new set of customers to the brand. “It also aligns with our larger vision of transforming the face of mobility in India,” said Nakra.
M&M is launching a subscription-based service at a time when passenger vehicle sales have been in a slow lane for the straight 10 months amid a liquidity crunch, rising ownership costs, and an economic slowdown.
Under the subscription scheme, a customer can use an M&M model for a monthly subscription fee for a minimum of one year. The fee ranges between Rs 21,000 and Rs 87,000 depending on the model and the duration for which it’s being subscribed.
The subscriber also has to pay a refundable security deposit that ranges between Rs 15,000 and Rs 50,000, depending on the model. The monthly subscription includes regular maintenance, 24x7 road assistance, accident repair, and insurance.
At the end of a year, the user can either renew the subscription of the same model, chose another model or surrender it. The surrendered vehicle will get added to Revv’s fleet of self-drive cars.
So, what makes leasing different from subscription? Leasing is for those looking for an asset light way of experiencing a vehicle. With a lock-in period of three to four years, the lessee should be comfortable using the same model through the tenure of the lease. It targets those looking for a comprehensive coverage on insurance, road tax with the possibility of buying back the vehicle at the end of four years, said Nakra.
Both the models, he claimed offers an attractive proposition over owing a vehicle as one doesn’t have to pay the margin money or go through the rigors of getting the CBIL score.
Moreover, the financier offers credit basis the ex-showroom price and not on-road price that includes road tax, insurance etc. Even though the monthly fee is marginally higher than the equated monthly installment (EMI) one will pay when getting a vehicle financed, the extra cost doesn’t pinch as everything else (repair, maintenance, insurance, and road tax) is covered by the monthly fee, said Nakra.