Saving money on four wheels: Car subscriptions continue to pay off

In 2021, we started conducting periodic assessments on the financial advantage of renting a vehicle through a subscription model instead of purchasing and owning a new one. We have conducted 4 assessments since then (in March 2021, July 2021, January 2022 and August 2022), updating for new car prices, financing interest rates and subscription monthly fees, which all resulted in favourable economics for subscriptions (~11-16% cheaper, on average) compared with financing and owning a vehicle for periods of up to 4 years.

We conducted our fifth assessment on the economic advantage of renting a car through a subscription model instead of purchasing a new one, updating for the latest subscription costs, financing rates and new vehicle prices, among other ownership costs.

We found that renting remains advantageous. We estimate average savings of 33% for 1-year leases, 21% for 2 years, 12% for 3 years and 2% for 4 years, based on a diverse sample of 13 car models and assuming the vehicle would be acquired with a down-payment of 20%. In scenarios with higher down-payments (which seem reasonable, considering the currently high interest rates), we still noted significant savings.
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High growth avenue (but possibly with a speed limit)

In ¶·Å£ÆåÅÆÔÚÏß Evidence Lab's latest Brazil Vehicle Demand Outlook Consumer Survey, consumers remained supportive of car rental subscription vehicle divisions' ongoing growth, albeit possibly at a slower pace than we expected. We believeÌýsubscription vehicles will be the main growth driver for Brazilian car rentals in upcoming years.

We believe the addressable market for that division in Brazil involves consumers who buy new cars and sell them at up to 4 years old. We estimate this market niche totals ~1.7m potential consumers (~1.5x YE21 Brazilian car rental companies' fleets).