Rich Brazilians Are Signing Up for Car Subscriptions Worth $5,000 per Month

The monthly car subscription market is thriving in the country, offering convenience and cost-effectiveness following a near-100% increase in new vehicle prices in recent years

Modelo RS e-Tron GT da Audi (Foto: Divulgação)
September 09, 2023 | 02:00 AM

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Sao Paulo — Brazilian automakers and rental companies across all segments are entering the car subscription market, employing a range of strategies and perks to attract customers, including the availability of sports cars and personalized services such as sending champagne on birthdays and helicopter rides around Sao Paulo. Monthly subscriptions can cost up to R$ 25,000, or approximately US$5.000.

Industry players are promising convenience and more affordable prices for customers who may not want or be able to buy a new car. According to the Brazilian Car Rental Association (Abla), the car subscription market in Brazil is currently comprised by 150,000 to 160,000 units for individual customers.

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The pandemic played a significant role in driving up car prices in Brazil, mainly due to supply chain issues throughout the auto industry. The average price of luxury models increased from R$ 265,000 in 2019 to R$ 510,000 in April this year, according to a study by JATO Dynamics.

Basic packages include documentation (IPVA and licensing), maintenance, insurance, and mileage limits. There is no down payment to get a car, which is typically the case when buying a new car.

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Audi, for example, entered the car subscription segment in September 2020 with a pilot project in São Paulo. Today, the service is available nationwide and includes almost the entire Audi product range.

“The service has yielded very positive results, and we are considering offering the first combustion sports car through our subscription program,” said Araken Madella, Head of Corporate Sales and Used Cars at Audi Brazil, in an interview with Bloomberg Línea.

Audi’s subscription plans start at R$ 6,245 per month for the A3 sedan and go up to R$ 21,840 for the RS e-tron GT. Madella explained, “To assist the customer, we have created a financial calculator to provide a more precise estimate of the subscription cost, taking into account different state-specific IPVA rates.”

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According to Madella, the trend is for this market to grow significantly in Brazil. “We want to grow organically. If the subscription market gains momentum, we will be prepared to offer a complete range of cars. All our new launches will already come with an active subscription option,” he said.

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A Window into EVs

He mentioned that subscription services could be the ideal platform for those interested in testing an electric car. “Many customers are a bit hesitant to buy an electric car and find a safe environment in subscriptions to try out the model. They don’t have to worry about variables like insurance, resale value, and maintenance costs,” Madella explained. In 2022, 21% of Audi’s subscription contracts were for fully electric models.

Chinese automaker BYD, which recently announced a factory in the state of Bahia, Brazil, already offers one of its models through a subscription platform. The plug-in hybrid Song, which sells for R$ 269,990, can is available for subscription at Localiza (RENT3), according to the manufacturer.

Brazil is experiencing a growing trend in the car subscription business, especially in the premium segment. We will grow significantly in this segment,” said Alexandre Baldy, President of the board of directors of BYD in Brazil, to Bloomberg Línea.

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Last Wednesday (30), BYD launched a 100% electric sports coupe, Seal, with 530 horsepower and a range of 520 kilometers, at a launch price of R$ 296,800. The model is not currently available for subscription, but the executive said that the Chinese automaker will explore all possibilities for services in Brazil. “We intend to offer viable models through subscriptions. If the market accepts our products, BYD will also provide them through subscriptions,” he added.

RS e-tron GTdfd

Champagne and Helicopter Rides

In addition to automakers, rental companies also target high-income customers with subscription services. For You Fleet, founded three years ago, already generates 30% of its revenue from the car subscription business.

The company’s packages include concierge services, maintenance with car pickup and delivery to the customer’s home, fine management, telematics, tracking, and driver statistics collection for the contracting party.

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We aim to provide what no other major company in this segment offers,” said André Campos, CEO of For You Fleet. He emphasized that the company’s primary focus is not on price, especially in the high-income segment. “For example, on a customer’s birthday, we send a basket with imported champagne and crystal glasses, along with a personally signed letter from me,” he said. On another occasion, a customer with three car subscriptions received a helicopter tour of São Paulo. “We make an effort to offer exceptional treatment,” Campos said.

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BYD Songdfd

He stated that the high demand is for cars priced above R$ 200,000, although the company can offer any model. Currently, For You Fleet has subscription contracts for vehicles priced at R$ 700,000, with monthly fees of approximately R$ 25,000, depending on the duration and mileage allowance. The BMW X5 hybrid and the BMW X6 gasoline models are among the highest-priced models in the company’s luxury segment.

In the luxury segment, the company offers subscription contracts starting at R$ 8,900 per month, with a mileage limit of a thousand kilometers. According to Campos, if a customer is close to reaching this limit, For You Fleet will contact them to discuss adjusting the contract. “We don’t wait for the customer to discover that they are about to pay a fine for exceeding the mileage limit. As soon as we detect a usage pattern, we reach out to inquire if they want to recalibrate the contract,” the executive explained.

For You Fleet’s plan for the next five years is to have a fleet of approximately 500 cars. “This is a niche operation. We face the challenge of maintaining the scope we envisioned from the outset,” Campos said.

According to the Audi executive, the trend is for this market to grow in the premium segment as well. “Our approach to subscriptions is to provide an alternative to the customer, not to compete with vehicle sales,” Madella emphasized.