If You Can’t Beat ‘Em, Join ‘Em: Car General Motors Embraces the Subscription Economy

By Aarthi Rayapura April 2, 2012

 

Blog_tien_bwby Tien Tzuo, Founder & CEO

Let’s say you’re looking for a new car. Your old car, meanwhile, sits idle in a garage 9/10 of the time. You want to test drive a new car, but you want to also save up more money so you can actually afford it. What do you do? Well, if you’re a subscriber to RelayRides, you might be able to earn money by lending out your idle car, find a free place to park your car, and even better, get a chance to test drive a new GM car on your own time. Seem impossible? In a few months it will be a reality.

Historically, the car industry has been one of the slowest to adapt to change. But in the wake of the financial crisis, well-publicized bailouts, and injured reputation, something has definitely Screen shot 2012-04-02 at 2.46.07 PM
changed. A recent article that appeared in TriplePundit.com discusses the reasons why General Motors, one of the most iconic American car manufacturers, is moving into what the author calls the “access economy” but what we know as “Subscription Economy.” Whatever the terminology, the shift is about single-purchase product-oriented businesses moving to products-as-services and subscriptions. We encouraged BMW to embrace the subscription model two years ago when they only were timidly exploring the subscription/access/sharing model and ZipCar was just beginning to gain traction. Now ZipCar is a well-established brand and GM has jumped into subscriptions with both feet.

GM’s partner is RelayRides, a service that lets you share your car when it’s idle with other subscribers. It’s similar to other car-sharing services and, as the article adroitly points out, makes a lot of sense for GM to invest in. From a marketing perspective, car manufacturers benefit greatly by car sharing services as they get potential customers exposed to their products.

It’s also a good investment, as companies like ZipCar have taken off as late. GM and the other major manufacturers are recognizing that ZipCar and other car sharing services are growing very fast and are proving to be not just a flash in the pan but a true threat to their business. It’s likely that major car manufacturers feel they need to act because so much of the population has moved towards the subscription model embodied by ZipCar. Simply put, consumer buying habits are forcing GM and others to change.

And that change is not only good for GM, but it’s great for the entire industry– from customers to upstart subscription companies to car manufacturers. For its part, RelayRides gets access to a great fleet of vehicles, gets exposure to millions of GM owners, and scores a major PR coup. But the biggest victors are the customers who can test new cars, have access to cars when they want, and ultimately tailor their driving experience to their own convenience. Customers having more choices when it comes to car “ownership” and driving is a great thing for everyone, and as more subscription services pair up with more car manufacturers, the likes of GM, Ford, BMW and Hertz will be recognized for what they are: pioneers.