Six years ago Toby Kernon, CEO of Wagonex, began extolling the virtues and possibilities of the subscription model of car ownership. It’s fair to say he’s made some progress.

Toby Kernon, CEO of Wagonex

Wagonex was a result of being a frustrated car owner for many years.

Going against my father’s advice, I didn’t buy a house, but bought a car on hire purchase instead. I love cars and going through the process of buying and selling them over the years, I always felt that I was the one being taken advantage of and was consistently left out of pocket.

I believed there had to be an easier, more flexible, customer-centric, digital first way of owning a car and started to learn about the subscription model. Everyone from the music industry to razor blade manufacturers were going into subscription and I saw the move happening with cars in the US, so thought the UK would be 12 to 18 months behind. It seemed like the perfect solution, so I took the plunge.

There were lots of ups and down to the point we’re at now.

I spoke to nearly every fleet manager, vehicle leasing and car manufacturer I could find, telling them about Wagonex and the subscription model. I would be politely listened to, patted on the back and ushered out the door. Eventually I found an insurer that believed in me and the way the market was going, and partnered with them. After more door knocking, we went on to manage vehicles for PSA Finance (Peugeot, Citroën and DS) at the end of our third year in business. Attitudes were changing and bigger car manufacturers began listening to us and considering subscription.

Covid was a game-changer.

Because of Covid – and thanks to companies such as Cinch and Cazoo – buying a car online became normal for many consumers. Recent statistics show that now more than 60% of people considered buying a car online, compared with 40% pre-pandemic. The rise of those online car retailers helped consumers realise they can buy cars online from the comfort of their own home.

E-commerce in the automotive trade is still in its early stages, but digital first is becoming the norm in many other sectors such as property and transport, and we believe it will soon for our sector too.

Outside investment is a sign of change.

The move to further consumer digitisation is probably one of the factors that helped us secure investment from Admiral Group’s fintech investment arm Admiral Pioneer. It was the first time the company had invested in a business outside the Admiral Group and was a phenomenal endorsement for us as a business – and for the concept of subscription.

Digital transformation in the industry will continue to develop in the coming years, shifting consumer expectations for digital first and more flexible products. I believe that car ownership will be something our parents and grandparents did, as new business models are developed and the focus on usage based models increases.

Subscription is here to stay.

To try and manage the current economic pressures, we envisage that by the end of 2024 most major industry players will launch subscription products, the majority of which will use a third-party provider to build a platform (such as Wagonex), instead of building their own in-house.

This will further cement car subscription’s position as a mainstream automotive product. The subscription model will continue to increase its market share from rental and leasing and I believe will overtake combined volume of both by the end of the decade.

The pressure is on for car manufacturers and dealers to diversify.

Competition is fierce and only those willing to change are going to excel. Jumping into subscription using an easy ‘off-the- shelf’ product, which dealers and manufacturers can use to diversify their revenue streams, is one way they can do that quickly and easily.