Vehicle as a Service Market Size - By Engine (Electric, IC Engine), Service Provider (Automotive OEM, Auto Dealerships, Auto Tech Startups, Car Subscription Software Providers), End User (Enterprise Users, Private Users), Vehicle & Forecast, 2024 - 2032

Vehicle as a Service Market Size

Vehicle as a Service Market size was valued at USD 8.7 billion in 2023 and is estimated to register a CAGR of over 20.5% between 2024 and 2032. The growing demand for short-term vehicle subscription services is boosting market growth. The extensive penetration and the rising popularity of vehicle leasing services are driving the demand for short-term leasing. Buyers must pay equal monthly payments for the duration of their vehicle ownership unlike traditional car ownership. Several leasing service providers impose a monthly fee that covers maintenance, insurance, and other recurrent expenditures.
 

The continually expanding popularity of automobile subscription services in the near term across geographies is expected to propel vehicle as a service (VaaS) market growth. Short-term subscriptions make Vehicle as a Service (VaaS) more accessible to a broader spectrum of users. People who do not require a car on a daily basis or simply on special occasions can profit from VaaS without making a long-term commitment.
 

For instance, in April 2024, the British Vehicle Rental & Leasing Association published data stating that, as of December 2023, the total number of leasing cars stood at 390,898. In addition, the number of personal contract hires has increased significantly in the past years. The emergence of subscription-based business models as well as extended flexibility over leasing are expected to contribute to the vehicle as a service market with a growing demand for vehicle leasing services.
 

The cost-effectiveness associated with vehicle-as-a-service is driving the market growth. Traditionally, an individual consumer would make a down payment, and the remaining cost was paid over a period of up to seven years in equal monthly instalments. Customers were solely responsible for paying interest on EMIs and insurance expenses. In terms of subscription services, users can purchase a vehicle with no down payment and fewer monthly payments. The monthly payment includes insurance, maintenance, and roadside assistance.
 

Furthermore, consumers have the freedom to switch automobiles as needed and return them at any time. These benefits, together with cost efficiency, are propelling the vehicle-as-a-service market growth. VaaS allows for flexibility based on needs. Users can choose a subscription plan that aligns with their driving habits, avoiding the extra costs associated with owning an under-utilized car.
 

The high ownership cost of vehicle as a service poses a major challenge, hampering its growth. The expense of procuring a new vehicle as a service requires a significant financial expenditure by building contractors. Businesses lease machines from manufacturers in the market to minimize this expenditure. The inclusion of sophisticated technology, such as IoT and remote monitoring, will increase the machine's initial cost.
 

Furthermore, these vehicles as a service have a number of other maintenance difficulties that need significant resources and time, which will raise the machine's maintenance and handling costs, slowing market growth. The primary prices of cars as a service are expected to fall in the next few years due to new and emerging technologies, as well as increased competition among industry participants.
 

Vehicle as a Service Market Trends

Vehicle as a service is witnessing rising penetration of third-party vehicle-as-a-service providers. The third-party enterprises offering vehicle-as-a-services, such as Drover Limited, Fair Financial Corporation, and ZoomCar, are expanding their market presence. The strategic business expansion, acquisition, and partnership strategies among third-party vendors are contributing to the vehicle-as-a-service market growth.
 

Third-party VaaS providers frequently prioritize providing consumers with a seamless and easy experience. This may include features such as faster online booking processes, various subscription choices (including short-term rentals), and effective maintenance management. This emphasis on customer satisfaction has the potential to attract new consumers to the vehicle as a service market who were previously unwilling to try traditional solutions. Third-party VaaS providers are tech firms that use technology to simplify operations and cut expenses. This can involve leveraging data analytics to improve pricing models, manage fleet maintenance more effectively, and even automate vehicle cleaning and preparation.
 

For instance, in May 2024, Zoomcar, a leading car-sharing platform in India, announced plans to add over 20,000 new vehicles to its fleet by the end of FY2025. This expansion is part of the company's growth strategy to capture a larger share of the rapidly growing domestic travel market in India. Zoomcar expects the rate of expansion to remain steady over the next several years as it widens its fleet to meet the growing demand.
 

Vehicle as a Service Market Analysis

Based on engine, the market is divided into electric and IC engines. The IC engines segment accounted for a market share of over 58% in 2023 and is expected to exceed USD 26 billion by 2032. IC engine technology is well-established, with many manufacturers, technicians, and fueling stations. This widely accessible infrastructure makes it easier & less expensive for VaaS providers to buy, maintain, and operate IC engine cars than other choices such as Electric Vehicles (EVs).
 

Automobiles using internal combustion engines are often less expensive to acquire than electric automobiles, resulting in reduced initial investments for VaaS providers, thereby allowing them to increase their fleet size more easily and appeal to a larger client base with possibly lower subscription prices. The limited range of EVs and a lack of broad charging infrastructure may hamper the adoption of EVs.
 

Based on vehicle, the vehicle as a service market is categorized into passenger cars, trucks, utility trailers, and motorcycles. The passenger cars segment accounted for around 71.3% of the market share in 2023. Passenger cars provide an excellent balance of size, comfort, and fuel efficiency, making them suitable for a variety of everyday commutes, errands, and personal transportation requirements. This adaptability appeals to a wide range of users including individuals and families.
 

Passenger cars have a far greater selection of models and manufacturers than other vehicle sectors such as lorries or vans, enabling VaaS providers to cater to a wide range of consumer preferences and price ranges. When compared to bigger vehicles, passenger cars often cost less and use less fuel. This translates into cheaper initial investments and operational expenses for VaaS firms, allowing them to offer competitive subscription plans to a larger audience.
 

Europe is the fastest-growing region in the global vehicle as a service market, with a major share of around 42% in 2023. European countries, including France, Germany, the UK, and the Netherlands, are witnessing significant market growth as they place a great emphasis on sustainability. VaaS encourages Electric Vehicle (EV) adoption by offering access to EVs without the need for ownership. It can also reduce overall automobile ownership, resulting in reduced emissions.
 

Europe's stringent pollution standards are driving automobile makers to adopt greener technology. VaaS can help with the shift to EVs by providing a greater selection of electric vehicles through subscriptions. Furthermore, densely populated cities in Europe have traffic congestion and parking constraints. VaaS is a practical alternative to automobile ownership, especially for people who use their cars rarely.
 

The U.S. has a huge, reasonably prosperous population with significant disposable income. This economic strength increases customer interest in convenient and flexible transportation solutions such as VaaS. Major cities in the U.S., such as New York, Los Angeles, and Chicago, have significant population densities, making automobile ownership impractical owing to parking shortages and traffic congestion. VaaS provides a feasible option for urban inhabitants. Furthermore, the U.S. has a vast population that is familiar with technological advancements, encouraging them to adopt VaaS platforms and mobile applications to book & manage subscriptions.
 

Asia Pacific is undergoing a rush in urbanization, resulting in increased traffic congestion and parking issues. VaaS provides a convenient and cost-effective urban mobility option, resulting in a big customer base. The ownership attitude is diminishing, particularly among younger generations that value experiences and access above automobile ownership. VaaS is fully aligned with this choice. China and India are likely to lead the Asia Pacific VaaS market due to higher populations, developing economies, and increasing urbanization.
 

Moreover, in countries in the Middle East & Africa (MEA), such as the UAE and Saudi Arabia, public transportation systems are underdeveloped or unreliable. VaaS fills this gap by providing a dependable transportation option, especially in areas with limited public reach. Additionally, there is a rising demand for luxury and premium car rentals in the MEA region. VaaS allows individuals to access these high-end vehicles without the commitment of ownership.
 

Vehicle as a Service Market Share

Hertz Corporation expands its fleet to encompass a variety of vehicles, from compact cars to luxury models, with a strong focus on electric vehicles (EVs). This strategy addresses diverse customer preferences and leverages the increasing demand for sustainable transportation. Hertz has also formed partnerships with EV manufacturers to offer exclusive models and provide incentives like lower rental rates, free charging, and access to premium EV services.
 

BMW Group introduces premium vehicle subscription services under the BMW brand, granting access to a range of high-end models, including sedans, SUVs, and EVs. These services offer flexible subscription terms and allow customers to switch vehicles according to their needs and preferences. Subscriptions also come with comprehensive service packages that cover maintenance, insurance, and concierge services.
 

Vehicle as a Service Market Companies

Major companies operating in the vehicle as a service industry are:

• Bavarian Motor Work AG (BMW Group)
• Borrow (Prazo, Inc.)
• CarNext B.V.
• Cluno GmbH
• Daimler AG (Mercedes-Benz Group)
• Porsche AG
• Drover Ltd. (Cazoo)
• Flexdrive (Lyft)
• General Motors Company
• Hertz Corporation
• Hyundai Motor Company
• OpenRoad (Portfolio)
• Sixt SE
• TATA Motors Limited
• Toyota Motor Corporation
• Volkswagen AG
• Volvo AB
• Zoomcar India Private Ltd.
   

Vehicle as a Service Industry News

• In November 2023, Vulog introduced an AI-powered software platform for Next-Gen Vehicle as a Service (VaaS) solutions, by offering innovative mobility services powered by advanced technology. This platform enabled both B2C and B2B mobility operators to achieve operational excellence, profitability, and sustainability by streamlining shared mobility services, such as vehicle sharing, rental, and subscription models, across a single fleet of vehicles.
   
• In March 2023, Gentari signed an MoU with MoEVing Urban Technology and Gati to expand its EV subscription services in India. It aimed to provide 1,000 three-wheeler and 500 four-wheeler electric cargo vehicles on a subscription basis. Gentari grew its EV fleet to over 4,000 vehicles across ten cities in 2023, with a mix of three- and four-wheelers. It also plans to expand its network of charging hubs from 7 cities with 162 points currently to 10 cities in 2023.
   

The vehicle as a service market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue (USD Billion) from 2021 to 2032, for the following segments:

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Market, By Engine

• Electric
• IC engine

Market, By Service Provider

• Automotive OEM
• Auto dealerships
• Auto tech startups
• Car subscription software providers

Market, By Vehicle

• Passenger cars
• Trucks
• Utility trailers
• Motorcycles

Market, By End-user

• Enterprise users
• Private users

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America 
• MEA
  • South Africa
  • UAE
  • Saudi Arabia
  • Rest of MEA