Volkswagen Car Subscriptions: The Journey towards Mobility Service Provider

Volkswagen: A name that doesn't need an introduction. Volkswagen is a German motor vehicle manufacturer founded in 1937. 

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You would expect Volkswagen to be your traditional car manufacturing company. But they have proved time and again that they are more than that. 

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Why would a traditional car manufacturer with a significant market share and an established brand tap into the world of subscriptions? 

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Business model 2.0: A push to sustainable mobility

Volkswagen wants to become the most sought after brand for sustainable mobility. They want to achieve this through a strategy that they call the ACCELERATE Strategy. 

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The transformation has four cornerstones:

• Electrification - Volkswagen says that by 2030 the percentage of cars sold in Europe with all-electric drive will rise to 70% and as a result, they want to launch at least 1 new electric model each year.
• Software-defined product - With half a million connected IDs. vehicles on the street, Volkswagen says that they will be able to translate direct customer feedback into improved and new functions.  
• New business model - as part of their strategy, Volkswagen launched AutoAbo (auto subscription) in Germany for its ID.3 and ID.4 model. 
• Autonomous driving - Volkswagen says that in 2026 automated driving with Level 2+ and possibly level 4 will be possible. This will allow for the continuous exchange of data and create a self-learning environment. 

Revenue from car subscriptions to increase

Volkswagen says that by 2030 around 20% of its revenue could come from car subscriptions and other mobility offering. They realised that a rising majority of people do not want to own a vehicle permanently but would like to use one for a defined period. Their subscription offering offers even more flexibility to their customers.

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Build a stronger online presence

They are making rapid progress in digitalising its sales activities and developing new business models. Volkswagen says that they are transforming into a tech company. They’ve also highlighted that Volkswagen wants to transition from a car manufacturer to a mobility-service-provider. 

An introduction to electric vehicles

Subscriptions are a great way to try out new products because the financial commitment is low. Adoption of electric vehicles as a means of mobility is at a pinnacle stage and monthly subscriptions make it easier for customers to familiarise themselves with this transformation. 

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When customers are sceptical about trying out new products, subscriptions provide a way out and encourage product adoption due to low financial barriers.