As Cazoo offers car subscriptions, how do these services work?

If you rifle through your monthly bank statement, there is a fair chance you will come across at least one or two subscriptions.

From a newspaper or magazine, to the gym, to Netflix, milk deliveries, beauty boxes and flowers, we are well used to paying regularly each month for things

But, there is one area in life that an awful lot of people won’t have a comprehensive subscription for, and that is owning a car.

Now rapidly growing online car dealer Cazoo has decided to join the ranks of those offering cars by subscription – with one all-in monthly payment for everything but the fuel and the chance to swap to a different motor in as little as six months’ time.

Time to subscribe? Cazoo offers new car owners the chance to sign up to a monthly subscription

When it comes to buying and keeping a car, most people fork out a hefty sum each year for insurance, pay for an annual service, an MOT and car tax. 

Many of those things can be spread out over the months, including insurance and vehicle excise duty, and most new cars are also sold on finance schemes with monthly payments made.

However, in an indicator of where some in the motor industry see sales moving to, it is possible to bundle all of these separate costs into one monthly subscription.

Online car retailer Cazoo (which This is Money and MailOnline owner DMGT holds a 20 per cent stake in via its DMG Ventures arm) is launching a subscription service for anyone buying a new car via their website.

It joins rival operations from a specialist called Wagonex, a handful of leasing firms, and even some car manufacturers, including Jaguar Land Rover and Volvo.

Of course, such a scheme will not be suitable for everyone and many who crunch the numbers might find it cheaper to go down the traditional PCP finance route. 

However, subscriptions offer an ease and flexibility that could see a Fiat 500 delivered to your door for £269 a month, a Jaguar F-Pace for £850, or a Tesla Model 3 for £949, all bills included, and the opportunity to swap in a relatively short time (although prices may rise if you want that freedom).

Cazoo joins the car subscription market

Cazoo has rapidly grown since launch to become one of the UK’s biggest overall used car dealers and its largest online one – and in December it bought subscription car service Drovers.

That has led Cazoo to branch out into new subscription cars. This, the company says, gives consumers an ‘all-inclusive’ car subscription offering, which includes insurance, maintenance, servicing and road tax in one monthly payment. 

The chief rivals to Cazoo’s scheme are Wagonex, some leasing firms, and the limited number of car makers who also offer subscription services, including Jaguar Land Rover and Volvo.

Services differ slightly, with Cazoo and Jaguar Land Rover offering cars for a minimum of six months, Care by Volvo stating it has a minim three-month notice, and Wagonex offering some cars with a minimum one month period.

Jaguar Land Rover offers four different subscription packages that give access to different levels of car: The £850 blue monthly fee gets an F-Pace, Discovery Sport or Evoque

Jaguar Land Rover offers four different subscription packages that give access to different levels of car: The £850 blue monthly fee gets an F-Pace, Discovery Sport or Evoque 

How does this stack up?

If you decide to buy a new car eligible for the subscription service via Cazoo’s website, you will be able to choose from a contract length of between six to 24 months. 

The new car you select can be delivered to your door in as little as 72 hours, or be collected at a convenient time at one of Cazoo’s 17 hubs.

As part of the monthly subscription, Cazoo says customers buying a new car will get fully comprehensive insurance cover, servicing, maintenance, road tax and 24/7 roadside assistance. 

For more affordable options, a hybrid Fiat 500 model will cost from around £269 a month, while a Vauxhall Corsa will be around the £319 a month mark. 

Subscriptions come with a 1,000 miles monthly allowance and a seven-day money back guarantee. At the end of the contract, subscribers will be able to return the car, switch it for another one or keep it on a rolling contract.  

Options: Subscribers to Cazoo's subscription can collect their vehicle or get it delivered

Options: Subscribers to Cazoo’s subscription can collect their vehicle or get it delivered

The cost of Cazoo’s new car monthly subscription service depends on a number of factors like the model of the car and the contract length – and you must pay two months’ deposit upfront.

For instance, on a 24 month contract, a Tesla Model 3 Standard Range Plus could cost from around £949 a month, while an Audi A5 will cost around £579 a month.  

But prices go up if you want a shorter minimum period of time to have the car. So, a Tesla Model 3 Standard Range Plus is £1,429 on a minimum six-month contract and an Audi A5 is £759.

By comparison, a Tesla Model 3 Standard range Plus costs £40,990 to buy and the electric car maker offers a 4.9 per cent PCP finance deal at £796 per month over the shortest possible 24 month period for those putting down a £6,000 deposit. 

With the £6,000 deposit averaging out at £250 per month, this gives the Tesla option an average monthly price of £1,046 over the 24 months, meaning that Cazoo’s £949 offer compares favourably.

However, those taking the Tesla PCP option have the opportunity to purchase the car with a balloon payment at the end and if it depreciates by less than the amount financed, could find themselves with some equity.

Over 24 months, Audi offers a similar two door A5 coupe to the Cazoo deal on a 3.9 per cent PCP with a £3,756 deposit and £5,000 Audi deposit contribution at £689 per month. With the deposit averaging out at £156.50 per month, monthly costs over 24 months would be £845.50.

Savvy new car buyers may be able to get better deals than those advertised on manufacturer’s websites, however, and the Cazoo cars may not be brand new zero mile cars, with some listed as 20 plate motors with delivery miles on them.

Any eligibility criteria to be aware of? 

To get a car subscription via Cazoo, a driver will need to be 25 or over, other firms and manufacturers will operate similar policies but ages may differ.

After applying to be part of a subscription service, the provider will review your driving history and run a few affordability checks. Applicants can expect a fairly rapid decision. 

What are the benefits of a subscription service?

For some customers, car subscriptions could be a good way of getting access to a car without the tie-ins or responsibilities of ownership or leasing. Subscribers also avoid having to deal with depreciation, as they never own the car.

The boss of Cazoo says a subscription service like the one his company has launched offers customers ‘flexibility and convenience’.

Alex Chesterman OBE, founder and chief executive of Cazoo, said: ‘It is clear from our research that a a comprehensive and simple car subscription offering is long overdue.

‘The launch of our subscription service means we can now offer consumers both new and used cars and the choice to either purchase, finance or subscribe, all entirely online. 

‘This is another step forward in our mission to deliver the best and most comprehensive car subscription player in Europe with over 6,500 subscribers.’

In fact, the company has already rolled out its subscription service in France and Germany, following its acquisition of Drover and Cluno earlier this year. Across Europe, Cazoo already has 6,500 subscribers, but is looking to grow this number significantly.

It is worth noting, however, that for all the talk of cars by subscription being the way forward, major car makers have not made a meaningful push into the space. Efforts so far have more like dipping their toes in the subscription car waters.

Speaking to This is Money, Jim Holder, editorial director at What Car?, said: ‘Subscription services that bundle car payments, insurance, roadside cover and any servicing and maintenance fees under a single offer buyers a convenient and simple path to car ownership. 

‘They take away the hassle of negotiating for a vehicle price, searching for the right insurance provider and having to pay for servicing on an ad hoc bass. They also help buyers budget their finances better, knowing how much their vehicle is set to cost them each month.’ 

Any extra costs and things to watch out for? 

While a subscription service for a car may suit some people, it won’t be for everyone, particularly those who like to really shop around themselves for the most suitable car insurance deal, for instance. 

Plus, the subscription service clearly can’t cover every single cost involved in running a car, and in particular, fuel. Any toll and congestion charges will of course also need to be paid for separately.

Other extra potential costs also need to be considered, but this will not apply to every subscriber.

If a Cazoo new car subscriber is likely to drive more than 1,000 miles a month, they will need to pay extra. Subscribers can choose to 1,500 monthly miles for an additional £100 per month or 2,000 monthly miles for an additional £200 a month. 

As with PCP deals, you need to read the small print and be careful of extra charges. 

If subscribers go over the agreed mileage in their package Cazoo charges 40p per mile for excess mileage if the subscription started after 18 May 2021 and 35p per mile if it started before 18 May 2021. 

Extras: Costs like fuel and toll and congestion charges will still need to be paid separately

Extras: Costs like fuel and toll and congestion charges will still need to be paid separately

To take a car abroad, subscribers will also need to pay for additional EU cover from NIG which costs £36 for two weeks and £54 for one month. Drivers may also need to purchase additional breakdown cover and the cost of this depends on the length of the trip and the country travelled to.

Finally, if a subscriber receives a Penalty Charge Notice they will be charged an administration fee of £20 on top of the cost of the PCN itself. 

Mr Holder of What Car? told This is Money: ‘The potential downside to this convenience is buyers could end up paying more than if they spent the time haggling with dealers, comparing insurance premiums and searching for the right roadside cover. 

‘The monthly mileage limits also place additional restrictions on drivers. The sensible thing is to a bit of research comparing vehicle prices and how much it would cost to insure and service the vehicle outside the scheme before committing to a monthly subscription plan.’ 

Who else offers subscriptions? 

In Britain, the subscription market for motors is still growing, but a number of providers are already up and running, including Flexed, Flexigo, Elmo, Sixt, Wagonex and Care by Volvo, for Volvo vehicles.

With Flexed, for example, customers can subscribe to a car under 12 months old for as little as 28 days. Models it has available include Audis, BMWs, Renaults and Range Rovers. 

Options: At Flexed, drivers could subscribe to a BMW car for 28 days , then switch motors

Options: At Flexed, drivers could subscribe to a BMW car for 28 days , then switch motors

There are a number of features that all these companies offer as standard, namely breakdown cover, tax, servicing and maintenance. 

But, age restrictions, deposits, the inclusion of insurance and administrative charges related to PCNs or speeding fines all differ from provider to provider.

Several firms offer electric vehicles, corporate usage, taxi driver-ready vehicles and single brand options, meaning that even in these early days in the British subscription market, there is plenty of choice, website says. 

For anyone thinking about signing up to a car subscription service, it pays to do some research and work out whether the costs add up for your individual circumstances. 

If you want to change your car frequently and conveniently, then it’s an option worth considering. 

But, if you worry about extra costs and think you’d prefer to, for instance, shop around for your own insurance and servicing provider, then more conventional buying or leasing methods could be a better fit.


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