Toyota Kirloskar Motor (TKM) has recently joined hands with Myles Automotive Technologies to expand vehicle subscription business for individuals in Delhi National Capital Region (NCR), Mumbai and Bengaluru. The entry of leading OEMs will create the much-needed thrust for higher vehicle subscription service uptake in India, says GlobalData, a leading data and analytics company.
Animesh Kumar, Director of Automotive Consulting at GlobalData, says: “Compared to several other countries, vehicle subscription is still in nascent stage in India. However, considering the changing consumer preferences, leading OEMs are coming up with subscription services. India, where approximately 85% vehicles are financed, presents significant potential for an innovative business model like vehicle subscription.”
Toyota had earlier launched new auto leasing and subscription services through its business vertical – Toyota’s Mobility Service (TMS).
Presently, vehicle subscription or short-term leasing market in India has presence of three categories of players—traditional leasing companies such as Avis, Orix, Myles; mobility companies such as Revv and Zoomcar; and major OEMs like Maruti Suzuki, Mahindra, Hyundai, Tata Motors, Volkswagen, Toyota and MG Motor.
Auto leasing currently generates majority of the business from corporate segment but is slowly picking up in individual customers’ segment in the form of vehicle subscription. India market is largely untapped, which is evident from the fact that auto leasing has a penetration of around 1% in India, where as in several other markets, the sector has a penetration of 40-45%.
Mr Kumar concludes: “The demand for personal vehicles is growing as people are hesitant to use public transportation and shared mobility services due to safety and hygiene concerns. The present economic conditions are making several customers apprehensive about making big-ticket purchases and these are drivers for the growth of vehicle subscription segment in India. With the entry of leading OEMs in the segment and favorable changes in consumer preferences, GlobalData expects the penetration of vehicle leasing and subscription to reach 3-5% in the next five years.”