Car subscription services - are they worth it?

You can subscribe to a Toyota Starlet for as little as R4 267 per month, but you won’t have anything to show for it at the end of the term.

You can subscribe to a Toyota Starlet for as little as R4 267 per month, but you won’t have anything to show for it at the end of the term.

Published Feb 1, 2023


Johannesburg - Subscriptions are something that we typically use to upgrade our phones in Mzansi, but what if you could also get your car on a fuss-free kind of contract?

Although it’s not a common thing in our country, there are a few options out there and Toyota recently added a relatively affordable option to the mix with its new Kinto One subscription programme.

Although they are in essence glorified car leases, which is nothing new, vehicle subscription contracts do provide a number of advantages for those seeking a stress-free approach to motoring.

Toyota’s Kinto One ‘pay-for-use’ packages, for instance, include the monthly subscription fee for the car as well as all scheduled vehicle service and maintenance and the Kinto Protect Limited Liability coverage. There are various packages available depending on the intended mileage and the contract period, and no deposit is required.

But is it a better bet than normal car ownership?

That really depends on what your needs are as each mobility model has its own advantages and pitfalls.

Our calculations showed that Toyota’s subscription can be cheaper on a monthly basis than a financed car. We browsed through a few options that give you the use of a Toyota Starlet 1.5 Xi, which is valued at R233 000.

The cheapest option came in at just R4 267 per month, but it comes with a mileage limit of 30 000km, which is 500km per month, and ties you in for five years.

Reducing the term to four years and upping the mileage limit to 50 000km (1 041km per month) bumped the monthly instalment up to R4 571. We also tried a 54 month term with a 110 000km limit (which is 2 000km per month) and that pushed the price up to R5 220.

We applied for finance for the same Starlet Xi, over 54 months, with no deposit and no balloon payment, and were quoted an instalment of around R5 580. The insurance cost for a 40-year-old male came to around R1 200, pushing the monthly expense up to R6 780.

But here’s where it gets tricky. Toyota says its subscription removes the risk of being saddled with a depreciating asset, but the flip side is that you have to hand the car back at the end of the contract and walk away empty handed.

If you’d bought a Toyota hatchback five years ago (we’ll use the Etios as an example because the Starlet wasn’t available back then) it would probably be worth in the region of R120 000 to R150 000 today, give or take, which would be a sizeable deposit on your next car.

The pitfall of financing a car is should something go wrong in the first few years and you can no longer afford the instalment, you could be trapped in a position where the car is worth less than the remaining finance amount due to the rapid depreciation that typically takes place during the first two years of a car’s life.

That risk becomes significantly bigger when you have a balloon payment, which is something we’d never recommend under any circumstances, no matter how low the monthly instalment is.

While a car subscription service does appear to take some of those dangers away, it is not without its own risks. If your financial situation changes and you’re no longer able to afford the monthly subscription fee, Kinto SA will charge you an Early Termination Fee, an amount not specified on its website.

While we’ve used the Starlet as an example, Kinto does offer various other Toyota products. For instance you could get a Toyota Rav4 for R11 671 per month (48 months, 50 000km), a Hilux Double Cab for R12 667 (60 months, 70 000km) or a Land Cruiser 300 for R19 851 (60 months, 70 000km). In fact you can subscribe to pretty much any Toyota on the market including the Supra and the Land Cruiser 79.

Fancy a Toyota Supra? You can subscribe to one for around R22 500 per month.

There are other car subscription services out there that are not affiliated with a particular car manufacturer but these can get quite expensive.

Drivve, for instance, gives you a much shorter contract of between 1 and 24 months, which can be cancelled at any time, but because they’ve absorbed the initial depreciation plunge your monthly instalment will be somewhat higher. A Toyota Starlet, for instance, costs from R7 850 per month.

FlexClub, as its name implies, also offers a wide range of packages that you can cancel at any time, and if you’re looking for an affordable vehicle you can get a Suzuki S-Presso from R5 301 (excluding the damage waiver of R1 767) or a Volkswagen Polo Vivo for R6 091 (+2 031).

Bottom line: a short-term subscription can be really expensive, but could make sense if you only need the car for a limited amount of time. A longer-term subscription from Toyota is a comparatively cheap way to own a car, but you won’t have anything to show for it in the end. Given the choice, we’d rather pay the extra money and own, but maybe we’re just old fashioned that way.