That's Rohan Albal and right now he's trying to buy himself a new car.
Now he is doing it in the best way possible, he's at CarDekho.com, the best website for
the process and even once he types in his filters where he says, I want a red car, I
want to spend Rs. 10 lakh, it's still a lot of work because there's at least 10 cars in
there maybe with three or four variants each, it's not easy.
But even once Rohan says yes, this is the car I want...ah, this is the car I want...the
job has not gotten any easier, because once he arrives at the showroom, there is still
work to do because he has to deal with that guy.
Now his job is to ensure that Rohan buys a car, and Rohan will meet multiples of them
as he goes to different showrooms and then his job is to see if he can't get more money
out of Rohan by upselling him maybe to a larger car, which confuses the process.
Now, Rohan...Mr. Vikas your pen.
What if I told you that there was a better way to do this, a new age way to do this.
Ah, I think I know what you're talking about, Shumi, we stayed safe, we have come back stronger
and the topic of discussion at the great Indian auto show here today is, car subscriptions.
Welcome to PowerDrift.
Alright guys, so buying a car can be a little tricky, but is subscribing to a car any easier?
That is the topic of discussion today and I think the things that we are going to be
covering then, Shumi, is first, is it any easier in terms of paperwork to subscribe
to a car?
Is the waiting period any shorter as against buying a car?
And third, what are the brands offering subscription model?
Right, where would you like to begin?
Let's start off with the brands, I mean, I know high-end luxury cars are more into leasing
which is slightly different than subscription and is not the scope of topic today, but I
think Maruti Suzuki, Toyota, Hyundai, Mahindra, Tata Motors, five big manufacturers...five
big manufacturers and what you should know is that none of them really run their own
subscription programmes, they are outsourced programmes that are run by organisations like
Oryx, which is Japanese, Myles and Revv and each case Myles, Revv or Oryx run the process
for the manufacturer through their showroom, so when you do have to take the delivery of
the car to sign paperwork, you'll have to go to the showroom, you'll go to a Maruti
or a Hyundai Showroom as normal, but when you register the car, Maruti offers you the
choice of registering it in your name with a hypothecation to Myles, Revv, Oryx.
Which essentially in plain words means Maruti is going to give you a car with white number.
Yes, but they're the only ones who'll explicitely say you'll get a white plated car,
everybody else will give you a black plated car which is the high-end tourist plate, with an
all-India tourist permit, so...that is where the problems begin for me, black number plate
essentially, it's like a taxi, which means you're going to have to pay state tax everytime
you cross borders, and also means that you cannot be travelling to Nepal and Bhutan.
Yeah, but yes, every time you cross a state border, you do have to pay the tax for a commercial
vehicle crossing the state border and if you don't, then I think it voids your insurance
or something like that, so it is pretty crucial that you do but it's no longer the process
where you have to stand in a queue at a little counter line...most of it is digitised...so
I mean, I remember the time when you used to cross from Delhi to Gurugram, and there'd
be a mandatory stop in a taxi because he had to pay the charges, but now they just call
whoever the agency is and the agency guy uploads the payment, and then it's done.
Now, we're talking about subscription here of course, and most of us have been subscribing
to things in the recent times, let's say Netflix, you can also subscribe to Apple Music, I think
you are the prime example of Apple Music. Yes, but I think the best subscription
is the easiest to understand is PowerDrift and if you haven't subscribed,
now would be a good time, you don't have to do any paperwork, deliveries are instant,
just hit subscribe and hit the bell notification icon so we can notify you.
No, but that's the point, I wish car subscription were as easy as subscribing to PowerDrift.
Well, yeah, look, the process is quite simple in the sense that because you're taking a
car, not downloading something to your computer, you are going to have to upload income documents
to prove that you can pay the EMI... you don't have to do that in there...
address proof so that they can recover the car in case you're going to play hooky.
Yeah, you don't have to do that in Netflix...and basic KYC documentation, Aadhar card, whatever,
so that's all the documentation and from whatever I can tell, you upload most of this to the
website, so it's not like you've to physically submit anything to anyone.
So when compared to documentation, when buying a car, is this a simpler process?
It is because in the case of the black plated car, the car is being registered to the service
provider's name, your name is nowhere on the documentation, you will sign an internal contract
that says you are the designated driver of this car for whatever duration you're signing up for.
And can I then pass it on to a close friend of mine and say, hey, come on experience my
car, can he drive the car when I'm the designated driver?
Yeah, so the funny part is that obviously because Myles, Revv, whoever is underpinning
the process, when you go to the FAQs on various manufacturer website, you will read the exact
same copy which is kind of funny and guys, pay a little attention to your own brands
and rewrite the copy, it's not really hard to do.
But my point is, they do encourage you to lend the car out to your friends if you want
to, all they expect you to do is make a phone call to your concierge, there'll be somebody
on the phone who you can call for problems or help or whatever and let them know that
this person will be driving the car, that's it.
What about the waiting times?
Let's say Maruti Suzuki Ertiga, it's a high selling product for Maruti, the waiting times
on this car when you go out to purchase one is about three and a half to four months, would
it take need the same amount of time if I'm to enter a subscription model with the Ertiga,
and is the Ertiga going to be available for subscription?
So from whatever I can tell, it looks like the waiting period is mostly related to the
paperwork, the amount of time it takes for them to process, your income documentation
and all of that, it has nothing to do with the vehicle models, so most manufacturer websites
seem to promise delivery of the car within three weeks to a month from when you start
the process of subscribing the car, so yes, in some cases, it might be the faster way
to get a car into the house.
Right, without paying the full down payment, I mean, that's a big advantage.
Yes, so think about it like this, okay, when I decide to buy an Ertiga, you're looking
at either a completely cash down payment of whatever Rs. 14-15 lakh, whatever the top
model is, or you're going to say, I'm going to pay Rs. 6 lakh in a lump sum and I'm going
to take the rest as an EMI, here, there is no lump sum, what you pay is one month of
rental as a security deposit, which you get back at the end, and one month as an advance,
I'm going to call it EMI simply because it's easier to understand, but it's subscription fee...
the subscription fee, yeah...right so that one month advance fee is paid and then
you're done and then you start paying on a monthly basis and just like your EMI would
get deducted from your bank, the subscription fee will get deducted from your bank.
Alright, so we're talking about the Ertiga here, but just to take a few examples, there
are quite a few cars that are available in the market for subscription, we've spoken
of Mahindra so, then have Toyota Innova for subscriptions for Rs. 60,000, Rs. 63,000 which
brings us to an interesting point, sometimes you are able to subscribe to used cars too,
because it's being run Revv or Myles.
Yes, so if you go to Toyota and try to get an Innova, you won't get a used Innova, but
if you go to Myles or Revv, you might be able to get used Innova, what they say is it's less
than three years old, for sure, the Innova was listed when I checked for about Rs. 63,000
for a four-year rental per month, but remember that this 63,000 includes all insurance
charges, it includes all maintenance, planned and otherwise, most of them are doing zero
depreciation insurance, so if you end up in a crash, most of the time, the insurance company
will cover almost 100% of your charges, you're only liable to pay the difference.
You're talking as if you're for subscription model of cars, but to me here's a problem,
okay, it's going to be slightly expensive, the only advantage that I'm seeing is that
if you are someone who likes to change your mobile phones, likes to change your clothes
every month, and then you would like to change your cars every year, then it is cool,
but you don't really own the car.
Yes, so the first thing that we have to understand about subscriptions is just like on Netflix,
you can watch any movie you want, but you don't technically own the movie.
Yeah, so if you're talking about the Mahindra Alturas to be bought, the car costs about
Rs. 36 lakh ex-showroom, now, if you rent it, it was costing about Rs. 1 lakh when you
checked it on the website.
Roughly Rs. 93,000, so let's round it off to 1 lakh.
Yeah, let's round it off to Rs. 1 lakh, so if you use it for three years, you're going
to be paying the cost of the car...ex-showroom...
ex-showroom cost of the car through subscription model...right,
that's three years and then the car is yet not yours, but if you want to make it yours,
then you're going to have to pay whatever the valuation of the car is.
There is a little bit of a catch here, okay.
Now, when you buy electric vehicles, we say electric vehicles are more expensive than
ICEs, but the delta that you pay right upfront, is compensated for by the fact that the electric
vehicle doesn't have any maintenance built-in, there is nothing to maintain, right?
In the very same way all the charges of maintenance are already built into your EMI, so you don't
have to pay them up.
That's true and by the way, we are talking about subscriptions, we're also talking about
lock-in period, let's say you lock-in for 12 months, but you want to cancel the, you
don't want the subscription anymore, then of course, you're going to be having to pay
the penalty for it.
Yeah, so if you think about it, it's actually a very flexible model, in that sense, right,
you can mostly subscribe to 12 months, 24 months, 36 months or 48 months, they generally
don't have plans beyond 48 months, but they say that if you want to extend the tenure,
they can work something out for you and obviously, the monthly payment falls as you take a longer
period on although, honestly, the difference isn't much, right, lock-in periods are quite
simple to understand, so if you take a 12 month subscription, most of the manufacturers
will say you're locked-in for six months, that means, exiting or swapping during those
six months is quite a bit more expensive than anything else, but think about it, it just
means wait two more months, and it becomes quite a bit cheaper.
Swap charges are almost negligible in most of these cases, which means upgrading from
say, a Glanza to a Innova, the swap charges aren't going to be a huge deal.
Extending tenures or reducing tenures outside the lock-in period is also not going to be
different because all they want you to pay is the difference in the EMI between your
current period and your client period, that's it.
Well, I still somehow can't wrap my head around this whole subscription model. Cars for me
are a lot more emotional, but then there are mature markets out there like the United States
where this is now on the move and it's catching quite a lot of traction.
So based on what I read yesterday, they are expecting that 10% of all vehicle sales in the
United States will move to subscription based purchase plans by 2025 and that's the world's
largest automotive well, car market, right?
And even then it's just going to be 10%, so...yeah, but I'm saying from the other perspective,
if you look at it from the Indian perspective where they are now saying that COVID-19 has
caused an uptick in people willing to subscribe rather than buy cars, the other thing that
we haven't talked about is used cars, if you go to Myles or Revv and pick up a used Innova
or something like that, the price has actually come down quite a bit...on a subscription
basis...think about it, the reason why people are afraid of used cars is because they don't
know what's wrong with it, they don't want to be saddled with repair charges later, but
that's already being paid for in the monthly equated payment, it doesn't matter what happens
to the car, I'm already covered, so from that perspective, the safest way to buy a used
car to me is subscription.
Now that I will agree on, buying a new car on subscription, I think it's going to require
some amount of mental strength here, but buying a used car through subscription model seems
to be the way to go here.
Yeah, the only only thing that I would point out is wrong with the subscription model is
so far it focuses primarily on volume sales models, cars that sell well appear on subscription
plans, which means when I go to Isuzu's website and look for the Vmax, no, not the V-max,
that's a Yamaha, the D-Max V-Cross.
Or the V-Cross, the Highlander, these cars are not available, many cars are not available
on subscription models...but we're happy to see the Mahindra website because the Thar
is available...at Rs. 50,000 a month, so all of you guys who wanted to have a Thar and
don't want to put on that downpayment at Rs. 50,000 you can have a Thar.
So I would say that subscriptions are a very interesting idea, especially for people who
are moving around a lot or are not really interested in their cars beyond the utility
value of the cars.
Cars in India, are strongly associated with your status, which means that if out of sheer
inertia, let's say you drive an Alto for a really long time, people will wonder what
your income levels are at least subconsciously, but a subscription model allows you to say,
I drove the Alto for a year, my salary is gone up, let me get a Dzire and also visibly
project the fact that your lifestyle is changing, without having to go through the process of
buying an Alto, selling off an Alto, buying a Dzire, selling off the Dzire and then there
is the fact that all of this is hassle free, in most of these cases insurance is done automatically,
your Fastag tolls are charged by them automatically, you just have to pay the billing when they
bill you for the, whatever they've charged, your car with.
So in that sense, there are a lot of, there is a lot of stuff that is simplified by the
process and to my, my favourite, can call them up and just go return the car.
Like a burger that you didn't like at McDonald's.
Yeah, except that McDonald's would probably give you a burger for free in a replacement
or something like that and in this case, you'll have to pay a little bit of charge.
We're talking about a car, we'll be talking about more cars, and then we'll be talking about
leasing of a car, the high-end luxury car makers do indulge in that, but that's a topic
for next time around.
We hope we could clear out some doubts out here.
Let us know what you think about subscription.
Will it work in India?
How soon will it work in India?
In the comment section below, in the meanwhile, I'll need to fix on some.
And I would like to encourage you to try out subscriptions absolutely vehemently, start
by doing it with PowerDrift, it's completely free, no paperwork is required and you can do it right now.
There's the button right there, just click it, hit the bell notification icon, and the
bell notification is crucial because the next time we come up with a great idea,
you just know it automatically.