Hyundai India works on a similar model with Revv, which allows customers to use cars from the Hyundai portfolio via a subscription based ownership model.
At a time when automobile manufacturers and dealers are saddled with huge inventory, Mahindra and Mahindra has come out with a new model to sell some of its stocks. The company will be offering its range of passenger vehicles on a subscription model, under which customers can use new vehicles for a minimum period of one year at a certain subscription price, which would include insurance and routine maintenance charges. The maximum period for which vehicles will be offered is four years.
The way the system will work is that instead of its dealers, M&M will sell the vehicles to a car rental company, Revv, and the latter will offer vehicles to the customers on a subscription basis, bearing the maintenance charges. On its part, M&M will service the vehicles as and when required with the charges being borne by Revv. This way, for all practical purposes, M&M may be able to clear some of its inventory — either from its own stockyard or from its dealer inventory.
The model gives users a flexible ownership experience without actually having to buy or own one. Veejay Ram Nakra, chief of sales and marketing, automotive division, at M&M, said the company had been exploring multiple ways for consumers to own the vehicle. “The subscription model gives the flexibility of driving the vehicle for a fixed period of time without having to worry about down payment and bank loans. All the expenses are taken care of for using the vehicle,” Nakra said addressing the media on a conference call on Thursday.
Even as the subscription model will seem to be a tad expensive in the long run compared to purchasing the vehicle, benefits like zero down payment, no road tax, zero risk on resale value and a routine maintenance costs are the perks attached to the subscription service.
For instance, a Mahindra XUV300 priced at Rs 9.5 lakh will be offered at a monthly subscription of around Rs 26,000. Consumers paying this hefty amount can surely buy the same vehicle and pay off the loan in lesser monthly equated monthly installments but the company feels that there are consumers who do not want the other hassles which comes with the ownership of vehicles.
Models like KUV100 and TUV300 will be given at a price ranging from Rs 19,000 to Rs 25,000 per month while the higher-end vehicles like XUV500 and Scorpio will be offered at anywhere between Rs 30,000 to Rs 37,000 per month.
Nakra said the models covers insurance, accidental repair and a 24×7 road side assistance without actually owning the vehicle. “These come at a marginal usage cost per month and is likely to attract millenials who prefer just using rather than owning,” Nakra said. The facility will be available for customers in Delhi NCR, Mumbai, Pune, Bengaluru, Hyderabad, Kolkata, Chandigarh and Ahmedabad.
As new car sales have fallen to a multi-decade low, manufacturers have been looking at different avenues to increase volumes. Hyundai India works on a similar model with Revv, which allows customers to use cars from the Hyundai portfolio via a subscription based ownership model. The subscriptions plans are divided into short and long terms, offered with benefits such as zero down payment, no insurance or maintenance and assured on demand delivery. M&M had in October last year joined hands with leasing company Orix and has been offering vehicles at a monthly lease for a minimum period of three-years and maximum of five years.