Industry Voices | Pitching Subscriptions, Flexible Leases to Younger CustomersIndustry Voices | Pitching Subscriptions, Flexible Leases to Younger Customers

Dealership Showroom, 1920s

Customer: “This car is what I need, but I don’t have all of the cash to buy it right now.”

Sales Associate: “No problem. Now you can finance your car, with the creation of General Motors Acceptance Corporation.”

Dealership Showroom, 1980s

Customer: “This car is really what I want, but that finance payment is just too high for my budget.”

Sales Associate: “No problem. Let me tell you about our new consumer leasing program – only pay for the part of the car you use.”

Dealership Showroom, 2020s

Customer: “I’d like to have a new car, but the money down on the finance payments, or that new special lease program, is too high, and, with the economy the way it is today, I don’t want to make any long-term financial commitment.”

Sales Associate: “No problem. Now we can give you a month-to-month, all-digital, new flexible lease subscription for the vehicle. Pay as you go – you can choose to buy it or give it back at any time, and the sale price is reduced by what you pay in.”

Maybe the future automotive retail world won’t follow this progression exactly. But if Deloitte’s survey on 18-to-34-year-olds is anywhere close to accurate, it looks like there may be substantial opportunity for new sales traffic on single-vehicle flexible leases, aka vehicle subscriptions.

Note: I’m not talking about the “change a vehicle whenever you want at the same price/multi-vehicle” subscriptions the manufacturers rolled out a few years ago. The selling point there, theoretically, was the convenience of being able to have “an SUV in the winter, a convertible in the summer,” etc. This was focused on high-end customers who, again, theoretically would pay almost double for this privilege. Even then no one made any money, as you had to keep double the inventory on hand; as with ill-fated car sharing, it was soon discovered that everyone wanted the same thing at the same time.

Instead, what I think the Deloitte study reveals is that 18-to-34-year-olds, as a condition of both their environment and familiarity, are interested in a vehicle contract that does not require a long-term financial commitment, does not require “money down” and provides the option to turn the vehicle back in or buy it. Like any other flexible lease or subscription model, you pay more per month for this construct, but it is a true value for the dollar exchange for the right millennial or Gen Z “buyer.”

Again, if there is this substantial interest as found by Deloitte, why isn’t any manufacturer or dealer going for this, even on an appearance basis, to generate showroom interest? It would seem that even just offering such a program visibly would give an OEM and dealer an obvious competitive advantage to increase shopper traffic.

It isn’t as if 18-to-34-year-olds are busting down the doors right now to buy new cars the traditional way; in fact, it's more the reverse, and a crisis seems to be brewing.

According to an IHS Markit Report, new-car purchases made by 18-to-34-year-olds were at their lowest point on record in March 2024, while the percentage of those 65-plus buying new vehicles was never higher. Extrapolate those lines out and it does look troublesome, so you would think that for future sales growth, OEMs and retailers would be focused on this sector right now.

Technology isn’t the holdback here; the services to make the easy, seamless implementation of any subscription or flexible lease program are readily available and inexpensive.

So, what’s holding things up?

Here are my thoughts, as I’m old enough, and have been in retail long enough, to remember when no prospect walked into the showroom and asked for a traditional lease.

Traditional leasing filled a clear market need by making vehicles more affordable and accessible, with a limited long-term commitment, but in fact, only took off when:

It took a few years, but with these three factors in play, outside of the unprecedented supply shortage years, leasing has since become a fundamental way for a large share of the buying population to afford new vehicles and avoid the problems of long-term ownership.

I think now is the time to go full throttle offering a subscription/flexible lease program, to try to recapture excitement for the 18-to-34-year-old market for new vehicle acquisitions.I’m crazy enough to believe it is not if, but when, subscriptions or flexible leases will become a major third channel for personal and small commercial-vehicle acquisition, just behind a vehicle finance contract or traditional fixed lease contract. And those OEMs and dealers who embrace this first the right way will win substantial market share by “skating where the puck is going,” to quote Wayne Gretzky.