If you’re looking for a different way of owning a car, there are now several providers in Malaysia that offer car subscription. Unlike the traditional way of buying cars through a hire purchase loan, you won’t have to fork out a hefty 10% downpayment and the monthly subscription fee comes inclusive with maintenance, insurance and road tax. A subscription also enables you to swap cars frequently as the plans are often tied to a 1 to 3-year contract.
The question is, is it more worth it to subscribe? Or is it still better to buy a car the traditional way? We calculate the ownership costs for several car subscriptions in Malaysia so that you can get a better picture.
Renault Malaysia is one of the first carmakers in Malaysia to introduce a subscription service. They currently offer the Captur, Koleos and the Megane RS with a tenure of one, two or three years contract.
To start driving, all you’ll need is to pay a security deposit which is refundable and pay for the monthly subscription. The usual road tax, insurance and regular service are included with the subscription. However, wear and tear costs such as tyres, brake pads, wheel alignment and wiper blades are not covered. For the Captur and the new Koleos, Renault does offer a wear & tear package at RM100/month and this is applicable if you’re on a 2-year plan.
Nissan, which is also distributed by Tan Chong Motor is also offering a subscription program for the Leaf and X-Trail. Unlike Renault, the subscription fee doesn’t come with road tax and insurance, but you do get the scheduled maintenance service.
Do note that these subscriptions come with a mileage cap of 20,000KM per year.
There’s also Flux, a multi-brand car subscription platform that was introduced a few months ago. They have a wide variety of vehicles from Kia, Honda and Toyota to premium vehicles such as Mercedes-Benz, BMW and Volvo.
The subscription fee covers road tax, insurance and maintenance, and they even offer a concierge service that handles delivery and even maintenance service. Another key differentiation is the ease of switching cars during your contract by paying a one-time RM375 swap fee.
One major thing to take note is that the base subscription comes with just 1,250km of mileage per month, which calculates to 15,000KM per annum. If required, you can upgrade your mileage to 2,000KM per month or no mileage, but it will increase your monthly subscription substantially.
To find out whether car subscriptions are worth it, we compare the total cost of owning versus subscription for several vehicles. For this comparison, we compare the same loan tenure (with 2.5% interest) as the subscription contract duration.
If you purchase a Honda City S, you’ll need to fork out RM7,383.60 for deposit and pay a monthly instalment of RM1,984.34. As a comparison on Flux, you’ll only need to pay a minimum deposit of RM1,585, which is equivalent to one-month subscription. (Do note that Flux may require up to 4 months deposit depending on the individual). If we opt for the 2,000KM/month mileage option, the subscription costs RM1,585/month.
Based on our calculation, you pay less money overall if you go with a car subscription and across 3 years, that’s a “savings” of RM21,759.93. If you own a car, you’ll be paying a total of RM78,819.93 and that number doesn’t include maintenance, road tax and insurance.
However, if you buy a car, you still own the vehicle which you can continue driving or sell to get back your money. When we checked on a couple of classified sites, a 3-year-old Honda City is going for around RM40,000 to RM55,000. In terms of value, buying is still better.
If you take the Renault Captur on subscription, you can drive away by placing a RM2,500 refundable deposit and pay a monthly fee of RM1,299/month. On a hire purchase loan, you’ll need to place a RM10.284.50 downpayment and a monthly loan repayment of RM4,049.52 if you’re going for a short 2-year loan.
Based on our calculation above, you pay RM50.412.98 less on a subscription which is significantly more “savings” than a Honda City. If we look at the current selling price for a 2 or 3-year-old Captur, it is quite similar to a Honda City which hovers around RM45,000 to RM58,000. For a RM100,000 car, the depreciation is quite high and in this scenario, a subscription would probably make more sense.
If you’re looking for a hot hatch, Renault is offering the Megane RS 280 Cup on subscription with the manual variant going for RM3,999/month on a 3-year contract. Across three years, you’ll pay RM154,816 less on a subscription which is half of what you would pay in total if you were to buy it via a loan.
We couldn’t find any 2 or 3-year-old Megane RS on sale but as a reference, a 2010 Renault Megane RS 250 is currently going for around RM77,000-RM83,000.
Car subscriptions are a great alternative for short term tenure. This makes it appealing for expats or those who need a car for a few years without worrying about selling off the vehicle.
However, buying a car through a loan is still more worthwhile for long term use and you can reduce the monthly commitment further by taking a longer 5 or 7-year loan. After the loan period, you still have a car to drive and you can even sell it to get some money back.
Another thing to take note is that most car subscriptions have a mileage limit while owning a car provides you with the freedom to drive as much as you want without any restrictions. This is very important, especially if you’re planning to use it for e-hailing or long-distance driving.
The beauty of a subscription is the ease of swapping cars at a shorter duration and this is a viable option if you want to drive a different car every two or three years. Similar to a typical phone rental contract, you just need to return the car and start a new subscription plan. There’s no hassle to sell your car, go through the process of a loan application and wait for your new car to arrive.
Apart from not having to fork out money for maintenance and road tax, the extra concierge service from companies like Flux is an added convenience that helps you save time. The concierge will pick up your car and return it to you after the car’s scheduled service is done.
What do you think of car subscriptions? Let us know in the comments below.