Youngsters these days are opting for car subscription models which allow them to utilize a car without actually buying it. But there are pros and cons to it.
In the latest episode of Shark Tank India Season 2, Amit Jain called out a pitcher who had a car subscription business. Car subscription models are quite popular these days and many automakers also offer these on some of their cars. The aim is to make a vehicle available for a user where he/she doesn’t have to buy the car but can pay a monthly subscription fee to use it and return it after the contract runs out or he/she doesn’t need it anymore. A pitcher on the show had the same idea.
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Amit Jain on Car Subscription Business
Sameer Arif pitched his idea of a car subscription model for electric cars. His ask was Rs 50 lakh for 3% equity in his company. He is catering to all those people who are not looking to buy a car but want to take advantage of it anyway. Hence, they can use any vehicle from the fleet of company against a monthly subscription fee. However, Amit Jain, owner of Cardekho group, called him out on his business model.
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His argument was that the amount that people would pay every month as the subscription fee could be used by them to pay the EMI of the car as well. In the end, they will be left with the car after paying the EMI for a fixed duration of time. That is the reason why no shark invested in this deal. While this argument holds true, one could counter this by saying that with the car subscription model, one doesn’t get tied down to paying the EMI for 3, 5 or 7 years. The plan could be cancelled at any time (even against a small fee if it is cancelled before the contract ends).
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Also, there are people who have to consistently move cities for job or personal reasons. It is not feasible to ship the car to every corner of the country frequently. It would incur a lot of costs as well. With car subscription models, the company can provide the car at the new place while keeping the terms of the contract the same. Hence, there are pros and cons to a car subscription model for the user and the company.
