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Car Wash Magazine

Vehicle Technology - TaaS

Time to enter the TaaS race
5 minute Read

In a recent telephone call, a friend was very excited to tell me he was taking delivery of a new car from a local dealership under the terms of a subscription contract. For one monthly fee, the vehicle will be covered for maintenance, insurance, warranty, roadside assistance and even car washes at the dealer’s location. During the term of the subscription he will be able to change to another car in the same brand’s product line.

My friend understands the maintenance routine – he will be required to have the car serviced at prescribed intervals and all service will be performed by the dealership. He is less sure, however, about the car washes. He likes to drive a clean car but the dealership is a long distance from both his office and home. He told me he was checking to understand whether or not a concierge would pick up the car to wash it and thought that could be an issue if he needed to take the car to the dealership for every wash himself. That might sound like a trivial concern, but the subscription fee is substantial and while it handles the major issues of vehicle ownership, my friend was also concerned about the convenience provided, and car washes were near the top of his list.

This is not just a story about someone’s concerns about maintaining a clean car – it is a tale about the transitioning of an industry and about changes you may need to make in the near future. Vehicle subscriptions are the start of that transition, but the bigger story is about the emergence of Transportation as a Service (TaaS) and a new horizon for aftermarket services. TaaS is the result of two trends:

  • New technology and increased manufacturing costs have driven the price of new cars beyond the annual income of most families. Extended payment periods up to 84 months and leasing programs may lower monthly outlays, but the overall cost of vehicle ownership is now prohibitive for many people. The car-buying rule of thumb has always been 20/4/10, meaning a vehicle buyer should be able to place 20 percent down on a new car and pay it off over a 4-year period using not more than 10 percent of their salary. Those days are gone for the majority of people buying a car in the U.S. and Canada, and some alternative to ownership is needed.
  • Autonomous vehicles (AVs) are coming and they will not be independent entities. They will be rolled out in fleets designed to cover defined geographies.

Manufacturers are moving on several fronts in response to these trends. They are forming vehicle subscription services as an alternative to ownership and they are proactively partnering with autonomous vehicle platform companies in preparation for a time when a portion of the market moves from owning cars to using cars.

New Car Subscription Services

Among the vehicle subscription programs introduced over the last few months are: Care by Volvo, Lincoln Canvas, Cadillac Book, BMW Access, Porsche Passport, Jaguar/ Land Rover Carpe, The Mercedes Benz Collection, Audi on Demand.

These plans vary but the core concept is the same in each – you pay a flat monthly fee that covers the use of the vehicle, maintenance, insurance, warranty, roadside assistance and some form of concierge service. The Audi program rolling out in their U.S. test market of San Francisco even covers FastTrak tolls!

These services are not inexpensive – they are all associated with high-end vehicles and can range between $1,000 and $3,000 per month, but other independent programs are aiming at less expensive plans:

  • Clutch, based in Atlanta, has developed the software necessary to manage vehicle subscription services (Jaguar and Porsche are both working with Clutch in the U.S.) and has also built its own vehicle supply program using both used and new vehicles. Clutch’s entry level subscription provides used vehicles (typically off-lease cars from dealers) and two levels of new cars ranging from mid-level trim to full luxury brands. Clutch is seeking relationships with dealers and other independent service providers to maintain their vehicles.
  • FlexDrive by Cox Automotive marries the needs of vehicle users and new car dealers. It allows people to change vehicles at will to fulfill a need. Doing a project on the weekend? Get a pickup. Taking the family on vacation? Get a van. The vehicles and all service are supplied by dealers using a mix of new and late-model used vehicles. The key to the service is the convenience supplied by the “back shop” software that makes the selection and vehicle delivery possible through a mobile app.

The software necessary to run vehicle selection and maintenance scheduling in subscription program apps can easily morph into managing a fleet of autonomous vehicles. Companies like RideCell are building software platforms that will allow B2B service suppliers (like car washes) to connect to TaaS vehicles to provide services based on a vehicle’s availability. In the future, a car wash operator will be able to track a TaaS vehicle to know when it ended its last customer or package delivery run and when it is scheduled for its next. Car wash operators will have new programs aimed at TaaS fleet owners:

  • Quick check – a review of vehicle readiness for a customer
  • Interior only – making sure the gum wrappers and popcorn from the last run are removed
  • Sensor clean – cleaning of video and LIDAR sensors especially in winter weather – critical checks for an autonomous vehicle
  • Full exterior/interior clean
  • National memberships with other car wash operators to assure the consistency of service for TaaS fleet managers.

This is a race. Can independent auto service providers like repair garages and car washes establish their role in the TaaS future before fleet owners decide to invest in the infrastructure and headcount necessary to service their vehicles? We think the answer is yes for three primary reasons:

  1. Independent auto service providers have a critical advantage in servicing TaaS vehicles: proximity. Anything that minimizes “dead head” miles will generate a true value proposition to TaaS fleets if they do not need to shuttle vehicles to central service locations or scramble mobile service teams to prep their vehicles for their next customer. Their vehicles will be passing by your stores continuously. Your ability to know where they are and connect with them to schedule service during their down time will be critical. Ridecell will help do that.
  2. Independent stores can use the same software as fleet operators to team together to provide seamless nationwide service levels. We envision an “I Am TaaS Member” program that would build common service templates to assure quality consistency and ease of digital interface.
  3. Independent operators with their own cash at risk are the most innovative people in business. Fleet owners will tend to be large companies that cannot move as fast as smaller companies that can build new value-added services aimed at keeping TaaS vehicles on the road.

As you think about your company’s future, the time to start acting on TaaS is now.

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