The car market is undergoing a rapid transformation. What was once a buyer’s market is now evolving into one driven by lessors and subscribers, fueled by the rise of car leases and subscriptions.

Subscriptions have really shaken up an industry that’s always relied on long-term vehicle ownership. And while the shift might seem big, it’s only just getting started. What began as a niche option is now quickly becoming mainstream, not just for individual consumers, but also for businesses. Many companies are now embracing novated subscriptions as a smarter, more cost-effective way to avoid maintaining a permanent fleet of cars.

In short, the automotive industry has had to rethink its approach. It’s no longer just about selling cars it’s about offering flexible, sustainable solutions that align with how people and businesses want to operate.

So, what’s next? Let’s dive into the possibilities!

Novated Subscription: The Essentials

Let’s break down what a novated subscription really is and why it’s becoming a game-changer for drivers like you.

At its heart, a novated subscription works a lot like a novated lease. It’s a salary sacrifice arrangement where your car costs, including the subscription and all the running expenses, are bundled into one simple payment, taken directly from your pre-tax salary. Less hassle for you, and more savings on tax.

Why You’ll Love a Novated Subscription

1. No Lock-Ins, Just Freedom
   Forget being tied down for 3 to 7 years like a regular lease. With a carbar Novated Subscription, you can drive the car for as long (or as little) as you like. Need a change? Swap or cancel with just two weeks' notice – no strings attached.
   
2. Weekly Payments, No Stress
   Big monthly bills? Not here. With carbar, you make easy, predictable weekly payments. It’s simple, manageable, and fits around your life.
   
3. Everything’s Covered – No Surprises
   Your weekly payment covers everything – the car, maintenance, rego, insurance, and running costs. No hidden fees, no unexpected bills, and absolutely no exit costs. It’s driving made easy.

Back to the Future of Novated Subscriptions

They say the best way to predict the future is to look at the past and the signs are clear. Consumer adoption of vehicle subscription models is accelerating, with the Global Vehicle Subscription Market valued at USD 4.3 billion in 2023. This growth signals a strong appetite for flexible car ownership alternatives.

But what does this mean for the future of novated subscriptions? More importantly, how will this rising demand shape the market and position novated subscriptions as a key player in the evolving mobility landscape?

1. The Rise of B2B Subscription Models
   
   The Global Vehicle Subscription Market is on a serious growth trajectory, with a CAGR of 33.2% and forecasts pointing to a market worth USD 75.6 billion by 2033. A big part of this surge? The growing shift toward car subscription models.
   
   For businesses, novated subscriptions are proving to be a smart, stress-free solution, good for employees, even better for the bottom line. Instead of juggling a traditional fleet, more companies are offering novated subscriptions to their teams.
   
   And here’s the kicker, it’s not just about keeping employees happy. There’s a huge bonus for employers: no AASB 16 headaches. Normally, businesses have to report car leases as liabilities, but car subscriptions? They’re off the books. That means less debt on paper and a much simpler way to manage fleets.
   
   Against this context, it’s no wonder that month-to-month car subscription business models are becoming a thing all over the world.
   
   It’s practical, cost-effective, and easy the kind of win-win that’s hard to ignore.
   
2. More Used EVs on the Road
   
   The high upfront cost of owning an EV is tough to justify, especially when resale values are dropping fast. In early 2024, used EV prices in the US fell by as much as 31.8% – making ownership less appealing for many consumers. With resale values in freefall, it’s clear why buying an EV outright isn’t the first choice for most drivers.
   
   That’s where EV subscriptions come in – offering an affordable, low-risk way to drive electric. Drivers can enjoy all the benefits of an EV without the downsides of ownership. No steep upfront costs. No resale losses. Just smooth, sustainable driving, month-to-month.
   
   With this level of convenience, who needs to buy a new EV?
   
3. Car usership replacing car ownership
   
   Even owning a regular ICE vehicle comes with caveats. The rising costs of buying, fueling, and maintaining your own car are beginning to make car ownership a less attractive option for most consumers. Stagnating wages prompted 5% of Australia’s new car market to opt for leasing vehicles over purchasing them in 2022.
   
   Vehicle subscription models make it even easier to drive a car without owning it. Just as with carbar, give as little as two weeks’ notice and you could literally change your vehicle every month if you so chose. It’s no wonder that even luxury brands like Porsche and Mercedes Benz are offering increasingly competitive car subscription models for their customers, according to a report by Fortune Business Insights.
   
4. More Partnerships, More Options
   
   As vehicle subscription models continue to rise in popularity, companies in the transport sector are taking notice and teaming up. Evolving consumer expectations are pushing vehicle marketplaces and car subscription providers to innovate or risk falling behind. It’s no surprise that they’re combining their strengths to create flexible, affordable alternatives to traditional car ownership.
   
   A great example of this is the partnership between Uber and Splend in Australia, which is encouraging EV adoption. Rent a new or used EV, and you’ll get 50% off the service fee. By joining forces, these two major brands are helping to accelerate both EV and rideshare adoption.
   
   With collaborations like this on the rise, we’re on the verge of a very different car economy – one that’s more flexible, sustainable, and accessible to all.