We subscribe to services like streaming movies application, newspapers and online games almost on a daily basis. But have you ever considered subscribing for your own car? It is the latest trend in the Swiss mobility sector and the start-up Carvolution is leading the way.
The automotive industry is changing and people’s needs regarding cars are evolving rapidly. In 2020, 236,828 new cars were registered and authorised to drive on Switzerland’s roads. But not every new car is actually owned by its driver: firstly, the concept of leasing a car has become popular in recent years, with over 600,000 leased cars in Switzerland alone in 2018; in the same year, a new model of car ownership appeared in Switzerland – car subscriptions. This concept is gaining more and more traction, most recently thanks to the Swiss market leader Carvolution.
New CHF 15 million Series C funding
The Bernese start-up Carvolution announced on 25 February 2021 a new CHF 15 million fundraising round led by Avaloq founder Francisco Fernandezand Ringier Digital Ventures, thereby strengthening its leading role in the car subscription market. Since its founding in 2018, Carvolution has been pursuing ambitious plans as frontrunner in the Swiss car subscription market. The alternative to buying and leasing a car is becoming more and more popular. Experts predict a market share of up to 40% for the car subscription market by 2030. Only three years after the founding of the start-up it already has over 40 employees.
This fundraising round comes less than a year after the announcement of a big CHF 50 million investment in the car subscription company by Mobiliar Insurance in summer 2020. Today, more than 1,000 cars comprising 46 different models are already driving on Switzerland’s roads. In 2020, Carvolution recorded growth of over 210% compared to the previous year.
Olivier Kofler, CEO of Carvolution emphasizes:
We have already been able to achieve a lot with Carvolution, but we don't want to rest on our laurels. We are pleased to have strong investors at our side who share the same vision.
Car subscriptions vs. traditional models
The major benefit compared to leasing or buying a car is the flexibility and subscription experience. With a car subscription a client doesn’t have to worry about taxes, insurance or maintenance costs. The desired car is usually delivered to the client within less than two weeks – making it much easier than dealing with a garage. It is also entirely up to the client for how long they want to use the car – from just a couple of months to several years.
A growing market
The largest player in the Swiss car market, Amag, estimates that by 2025, 10–15% of all new car sales will come from subscription models. It’s therefore no surprise that the market for subscription providers is growing strongly: manufacturers such as Toyota, Volvo and BMW have their own subscription programmes; Amag has a subscription subsidiary called Clyde; and rental car companies such as Sixt and Hertz have recently started offering subscription products, as have various other independent dealers such as Gowago.ch.