When you walk into the finance department of any car dealership today, you’ll notice a subtle shift in the youngest patrons. It was noticed some time ago by Dustin Gingerich, finance director of Kokomo Auto World in Indiana. Gen Z consumers show up having done their homework. They are familiar with the figures. They’ve already researched the $199 monthly payment that used to make the finance desk seem miraculous, so they’re not expecting it. More and more, they want a structure that fits their real lifestyle—one that is adaptable, all-inclusive, and has a clear way out when things don’t work out. They want a subscription, to put it another way.
This is a significant cultural change. Alongside buying, leasing, and renting, it’s the start of what some analysts refer to as the fourth pillar of auto purchasing—a unique and expanding method of obtaining a vehicle. The market for car subscriptions was estimated to be worth $5.5 billion in 2023 and is expected to reach $100 billion by 2032, growing at a compound annual growth rate that would make most conventional lending products seem stagnant in contrast. A generation that grew up with Netflix, Spotify, and Amazon Prime is largely responsible for that trajectory. They have simply applied the same reasoning to everything else they consume, including the car parked in the driveway.
According to Deloitte, 28% of consumers between the ages of 18 and 34 now favor subscription models for car access, compared to 18% for all age groups. A more pronounced age gradient was discovered by Volkswagen Financial Services. According to the study, 61% of respondents between the ages of 18 and 34 said they would be interested in car subscriptions. For those aged 45 to 54, that percentage dropped to 26%, and for those aged 65 to 74, it dropped to 11%. The concept of a monthly subscription, as opposed to a loan, a title, and a depreciating asset parked in front of the house, feels more alien to older consumers. It’s simply how access functions for Gen Z.
Beyond simple preference, there are financial reasons for this. The European Commission reports that between 2010 and 2023, house prices increased by 37% throughout Europe, while rental costs increased by 16% and wages remained mostly unchanged. A car requires a down payment, insurance, registration, repairs, and a long-term loan on a depreciating asset all at once, and Gen Z entered adulthood in an economic climate where big financial commitments feel genuinely precarious. It’s not just practical to have a subscription that combines the car, insurance, and maintenance into one monthly payment. For some people in this generation, it’s the only structure that truly fits their budget, which is already stretched thin due to rent, student loans, and an ever-increasing cost of living.
Former Aston Martin Lagonda CEO Andy Palmer, who currently leads EV charging company Pod Point, has been observing this change for years and explains it simply. He contends that because Gen Z was raised in a time of digital services and subscription models, they are more accustomed to this type of access than previous generations. Another layer is added by the convergence with electric vehicles. Battery obsolescence is a real concern for buyers looking five to seven years ahead, EVs are still relatively expensive to buy outright, and their technology is developing quickly. All of that is avoided with a subscription. Similar to upgrading a phone plan, you purchase the car, avoid the depreciation risk, and switch when the next generation of battery chemistry comes out.
The generational concentration is supported by data from the businesses that actually manage these initiatives. Half of Finn’s customers are under 40, according to a joint report with Boston Consulting Group that looked at customer demographics. Compared to the typical new car buyer, who is typically 50 years old, that is very different. In essence, the industry is witnessing the development of two parallel markets: a younger one that is focused on monthly access rather than long-term ownership, and an older one where conventional finance still holds a dominant position. It’s difficult to ignore the fact that the auto finance sector is still catching up after decades of optimizing for the older model.
Among the well-established OEM initiatives currently in operation are Volvo’s Care by Volvo and Jaguar Land Rover’s Drive Pivotal, which provide an indication of where this is headed. Maintenance appointments, roadside assistance, insurance premiums, and frequent model upgrades can all be included in a subscription, thereby transforming the automaker from a one-time transaction partner into a continuing partnership. Palmer refers to this as “building continuous customer relationships” as opposed to making a single sale. The subscription model gives automakers a reason to stick around, something the traditional dealership model could never provide in a time when younger consumers are wary of ownership and sensitive to switching costs.
In markets like the US, where cheap credit has historically made ownership feel affordable, it’s still unclear how quickly this will change the mainstream market or whether the pricing models will develop quickly enough to compete with aggressive loan financing. The Gen Z auto loan delinquency data, which is much higher than pre-pandemic levels, indicates that traditional financing isn’t doing too well for this generation either. Something is changing. The industry’s most obvious solution to date is the subscription model.
