Wagonex interview: About car subscription and the future of car ownership

We spoke to the founder of Wagonex, Toby Kernon who shared his insights into the world of car subscription, the challenges and the future of car ownership.

1. When and how did car subscription get on your radar and decide to get involved?

When I founded Wagonex five years ago, I was fed up with the options available to drive an SUV in the winter, and a convertible in the summer. It quickly became clear that the automotive industry needed to have a completely new way of choosing, ordering, and driving a car, so Wagonex was born as an online platform that’s easy to use, flexible around the driver, and all-inclusive. We have built a better, less stressful car-driving experience, which not only unlocks subscriptions for everyone, but does it in a flexible, fair, and simple way.

2. Do you see car subscriptions becoming as common as other forms of car finance?

Yes, we’re currently seeing significant growth in consumer and industry demand for car subscriptions as a viable option for everyone, whether they’re looking for short, one month rolling set-up or as long as 24 months, subscription is here to stay and we’re confident that everyone who uses a car subscription will continue to use it - our data already says as much.

3. What are the main barriers you had to overcome as a company entering this very new market?

As the longest-standing car subscription service in the UK, we’ve faced more barriers than most. For us the definition of subscription was the most important thing to get right. We often joke that we should write a book someday. What’s interesting is that all the main providers in this space have approached the sector differently. With Wagonex we work with a range of suppliers and partners, ensuring that we keep a wide range of vehicles on the platform and to unite all car subscriptions into one place.

So the main barrier was getting this infrastructure up and running, and hitting a critical mass of suppliers who are passionate and love subscriptions as much as we do. Fortunately it was a no-brainer for our existing partners and we’re seeing more and more join the platform as car subscriptions gain popularity.

4. How have you seen your relationship with dealerships change over time? Are they more open to subscriptions and what’s their view on it?

It was initially an uphill endeavour, as many dealers initially saw us as quite adversarial and were worried about what the digitisation of the automotive market meant for them, however it's quite the opposite. After they understood our proposition they saw subscription as a new way of working. All the suppliers that we work with are committed to subscription and have embraced it since working closely with us.

5. Since 2016, a few other companies have entered the market (Cazoo via Drover, Onto, Care by Volvo, Evogo etc), what has that meant for Wagonex?

We have always welcomed more subscription providers, it’s an indicator that the subscription model is working for customers and compared to the beginning of our journey when we were quite literally walking in uncharted territory with just an idea that subscription cars will be something that drivers would want but now, with our success and some big players in the space, it’s validation of our Big Idea of the future of driving. A win for car subscription is good for everyone involved.

6. Did the pandemic have a big impact on demand? Have you seen a strong recovery now that restrictions are over and people are starting to enjoy their freedoms?

The pandemic opened up awareness of car subscription, and we’re grateful to have worked with partners who have understood that flexibility is key currently. One partner ran a campaign in collaboration with the NHS, for example, to help nurses and doctors avoid public transport and get to work without risk of exposure to COVID-19. With lockdowns, and work from home becoming the norm, people need flexible access to a car because they aren’t using their car in the same way. We’ve spoken to a number of subscribers who had found themself looking out the window at a car they had to keep paying for, but weren’t driving. Subscription changes that.

7. What have you learned from other countries where the car subscription market is bigger (USA in particular)?

It’s easy to say that the American, European, and UK markets are all very different, because on face value they are. However, what's clear is that drivers all around the world are looking for a way of driving which is fundamentally different and addresses all the pain points of leasing, renting, or owning. We’re proud of driving that change in the UK and beyond.

8. What does the future look like for Wagonex? Where do you see the company in 5 years, 10 years?

World domination? The future is incredibly exciting for Wagonex. We’re grown significantly over the last two years, doubling the people who work with us several times over. I can’t see that stopping any time soon. We’re continuing to make improvements and changes to how our site works, and we’re passionate about leading the car subscription proposition both in the UK and worldwide. As consumer demand grows, so does the pressure on the industry, from manufacturers to rental companies, to address this need, and we’re looking forward to working with them to realise their potential within this rapidly growing space.

9. What are the most popular cars that people search for?

We have a huge amount of range across the site, and in terms of views our EVs are always popular. This makes sense to us - subscription gets around the many barriers to usership which exist for an EV. Outside of the EV space, premium brands such as BMW or Audi are always in high demand.

10. Getting a car on subscription is very easy, but what are the main barriers, or common concerns people have when getting a car this way?

With so many emerging subscription brands, there have inevitably been different ways to define subscription, so one of the key areas for us is education on what subscription actually gives a driver. Subscription isn’t everywhere and recent surveys commissioned by ourselves show that it has a lot of room to grow, but the more we can raise awareness of how subscription works and what it is, the better.

Additionally, Wagonex offers a realtime personalised embedded insurance option with all of our vehicles. It’s not compulsory, and we feel that it offers a significantly better deal in comparison to your classic fleet insurance used by some in the subscription space. As an industry this is something we should be working towards, and ensuring that if you have never had a point on your license and you drive safely, then you shouldn’t have to pay the same amount as everyone else.

11. What are the most common objections?

One of the main points of confusion is around the monthly price, however this includes maintenance, MOT, roadside assistance, and more all rolled into the single monthly payment. Additionally, instead of putting down a whopping deposit just to get into the car, our subscriptions offer a cost-effective alternative with a refundable deposit that’s significantly lower than a leasing deal, and you get it back at the end of the subscription.

12. Do people tend to try out a car just to see what it’s like, only to go and buy it, essentially using car subscriptions as a long test drive? Is that a concern for Wagonex at all?

Try before you buy is certainly a way that drivers are treating subscriptions, and that’s fine with us. We’re seeing our EVs being subscribed to for shorter periods of time than the ICE cars on our marketplace, because people are still unsure what going electric is like, and what challenges they might face. I myself recently took an EV car subscription, and for the first month it was like having another child - where do I charge it, how long for, but I quickly adapted. While I’ve got my EV for the long haul, I can fully understand not knowing how an EV works and wanting to try it out with a subscription before fully committing.

13. What’s the target audience, your ideal customers? Is it more single people looking to try different cars, or families seeking easier car ownership?

It’s a mix. There isn’t really a single ideal customer for a subscription - everyone can benefit. If you live in the city but need a 4x4 for a summer getaway with the kids, we’ve got you covered. If you’re a student home from uni for a month, subscription is the answer. What’s clear is that younger people don’t want to be stuck in a 3/5/7 year lease with a car that doesn’t change. Getting a MINI is amazing when you’re 25, but if by 30 you’ve got two children it’s just not sustainable.

Subscription is also prestigious for some subscribers. We see this with our repeat subscribers of premium vehicles, who are more likely to swap and change regularly, making sure they always have the newest model with the newest plates.

14. Do you think there’s a big knowledge gap in people which may be hindering the growth of car subscriptions overall?

Yes, and no. Subscription as a term in itself is known in popular culture, we subscribe to all sorts of things, from socks to TV, to gin, customers inherently understand that a subscription is a monthly payment that gives you added benefits.

There is also still some work to be done on customers' understanding of the Total Cost of Ownership of a vehicle. Running a car is hugely expensive when you add all the costs of service, maintenance, and interest on payments together. Subscription is all-inclusive with the option to walk away.

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In the meantime, you can find more about Wagonex here.