We Called It: BMW Embraces Subscription Model, Tries to Race Past ZipCar

By Tien Tzuo October 2, 2012

Tien-tzuo1By Tien Tzuo, CEO

 

In June 2010, we talked about how BMW really needed to be more like Zipcar. We argued that BMW was already in the Subscription Economy since over 60% of its revenue was coming from its leasing business. We suggested that Zipcar’s flexibility gave it a major leg up on BMW and other car manufacturers; leases were still long-term, inflexible relationships while Zipcar offered the ability to switch out cars and use cars only how long you needed them. We argued that BMW would offer shorter leases, and the ability to switch models.

 

We’re not exactly Nostradamus, but it turns out we may have been onto something. BMW announced over the weekend the start of its BMW on Demand USA program, a smaller-scale version of its German program that will let you rent any BMW model on a short-term basis. So far, the BMW on Demand USA program is limited to the New York tri-state area and the BMW 328i Sedan. You can rent one from a dozen dealers starting at $35 an hour for a minimum of 4 hours. Longer deals include a 24-hour rental for $210 and a weekend package for $350. Though so far the American program is limited to a single car model, BMW’s German program suggests the company recognizes the importance of opening its entire fleet to rental.

 

BMW on Demand USA program shows that BMW is willing to take on Zipcar more directly, and recognizes the potential of short, customer-focused rentals. And the program also shows that BMW still keeps its identity as a premium car manufacturer intact. Instead of having subscribers pick-up cars in pre-assigned spots around a city (ala Zipcar), BMW is hoping that subscribers will trade off the more convenient hours of Zipcar for the more posh experience of going to a BMW dealer. And BMW still likely wants to sell you its 328is, but is at least recognizing the potential of the alternative revenue stream provided by subscriptions.

 

So, if we’re going to continue to make predictions, we’ll say this: within the next year, another car manufacturer will offer a similar hourly-rental service to BMW on Demand but they’ll let you choose whatever car model they have available on the lot. And we’re going to make the not-so-bold prediction that such a subscription offering will be successful, further validating the Zipcar model while they challenge it.

 

With all of our predictive abilities, we really should be heading to Vegas… in our rented BMW.