At the 2016 Los Angeles Auto Show earlier this month, Hyundai Motor America announced it would make its Ioniq Unlimited electric car available via subscription, giving drivers a new kind of ownership experience. With the Ioniq Electric, drivers can pay one monthly subscription price that includes unlimited mileage, electric charging costs, maintenance, repairs, wear-and-tear items, and purchase fees like registration.
“We're excited to offer Ioniq Unlimited as an innovative, worry-free means of clean, zero-emission vehicle ownership along with our new Ioniq Electric vehicle,” said Dean Evans, vice president of marketing, Hyundai Motor America. “This new ownership experience adds to the satisfaction of driving a no-compromise, clean vehicle with unlimited mileage and zero hidden costs. It was time to make clean vehicle ownership easy for everyone.”
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Vehicles will be available for 24 or 36 month terms, and the haggle-free price is all-inclusive. Unlike leases, there is no payment due at signing or a buy-out option at the end of the lease. As an added feature, the subscriptions can be completed mostly online. Here's how it will work:
- Prospective customers choose their vehicle from their dealer's inventory.
- They'll select a 24 or 36-month term, and preview the all-inclusive monthly payment online.
- They complete a credit application online, and once approved, they go to the dealership to sign forms and pick up their car.
Hyundai says this process was designed specifically to be transparent and stress-free followed by an “enjoyable ownership experience.” The subscriptions will launch in California in early 2017, Hyundai said. The company did not release pricing at the time of the announcement. According to Green Car Reports, the Ioniq Unlimited will target Millennials, the group most likely to buy the Ioniq electric car.
Hyundai is not the first company to explore car subscriptions, but it is the first to do so in lieu of car loans, leases or outright purchase. Other subscription models include Clutch, a monthly subscription service that allows members to “flip” vehicles. Prices range from the Pioneer plan at $850 a month and the Adventurer plan at $1,300 a month. These subscriptions include the rights to use a vehicle, insurance, unlimited flips between vehicles and unlimited mileage. It also includes maintenance and repairs, as well as hand detailing.
Amber One is a European car in development that will not be available for purchase. Instead, drivers can only get it by subscribing for about $37 a week in U.S. dealers, reports Tech Crunch. The difference with this service is that it is a shared car service, so the subscription gives customers the access to use a vehicle, not a dedicated vehicle. The vehicle is set to go into production in 2018, so the pricing and model could change considerably before launch.
We are always in favor of innovation, and Hyundai has created an interesting alternative to traditional auto loans and leases. While the subscription model borrows from each of those models, it offers unique features like all-inclusive pricing which takes some of the apprehension out of car ownership.
With shorter term options and eco-friendly features, the vehicle itself will appeal to Millennials and other eco-conscious drivers. The “sexy” subscription label and the simplicity of the model which many young buyers are familiar with make the package even more attractive.
If this test is successful, we can see Hyundai expanding this to other makes and models, and other manufacturers testing the subscription model on their own products.