We Try Out FINN, the German Car Subscription Service Now in the US

Car subscription services have really struggled to take off in the US.

Hertz had a “My Car” offering, which seems to be dead. Enterprise has one in four cities, while Sixt and Go are available in a handful of major metropolitan areas. A few carmakers like Genesis, Porsche, and Volvo have programs which are also only in major cities, or (Volvo) may not have any cars available at all. All of them have complicated application processes, various fees, down payments, and/or hoops to jump through.

FINN car subscription service, which launched in Germany in 2019, entered the US market in early 2022 with the goal of making a car subscription service more like getting monthly razor blades or a food box. Signup is done entirely online and should only take a few minutes. There’s one flat fee for the rental that covers everything, and the car is dropped off to you anywhere in their service area, which is currently 11 Eastern states and Washington, D.C.

To try out the service, we chose a 2023 Cadillac XT6 Premium Plus AWD, which stickered at $62,580 (it included $4,390 in options). It’s available at a monthly flat rate of $899. Subscribers sign up for either a six- or twelve-month term, and the $899 rate comes with 850 miles a month averaged out over the term. It’s like a lease and customers can upgrade their amount of monthly mileage if desired. The only fee on top of that is for the vehicle pickup at the end of the term, which is $199. Everything else is included—taxes, maintenance, and insurance.

For a 31-day month, that averages out to $29/day. The cheapest conventional rental car we can find in the same area is a Mitsubishi Mirage, which would run $49.68/day, plus insurance, and it must be picked up at the agency. Try to book this same car in a large city, and the rate jumps to $67.45/day.

On the surface, the FINN car subscription pricing model makes little sense. It would take the company almost six years just to pay off the sticker price of the car, never mind the additional overhead expenses. To better understand the business model, we needed clarification. So, we called up FINN’s charismatic and fast-talking CEO Max-Josef Meier in Germany for an explanation. Just how does the company make money? And how does this system work in general?

For starters, FINN doesn’t need to cover the entire purchase price of the vehicles. Rather, the company only needs to cover the portion a vehicle depreciates during its time on fleet. Most of the cars are presold or include buyback agreements. The period of ownership is synchronized — and FINN holds the car for one year in most cases before it goes back.

There’s once fixed price offered, regardless of region or proximity to a major city. This allows subscriptions in densely populated areas to help subsidize more distant ones.

This year, the company broke even on a net income in Germany, and so far, unit economics already show positive in the US.

Now that we have the basic pricing model, let’s dig deeper into FINN as a company. Launched in Germany in 2019, as mentioned previously, the company entered the United States in 2022. FINN felt car sharing had been poorly explored and implemented in the USA, so the market was wide open.

Before entering our market, representatives looked to create partnerships directly with OEMs. A lot of visits to Detroit, Ingolstadt, and Munich were made as the company prepped for the brand’s entry into America.

The goal is to make using FINN car subscription feel like any other retail experience. The biggest hurdle for the company currently is getting consumers familiar with the business. In Germany, word of mouth and customers recommendations helped grow the company organically. For America, much more paid/direct advertising has been required initial. But the results are starting to show. There has been incremental growth here and there, with little FINN communities popping up sometimes, in local clusters of subscribers.

According to Meier, FINN is growing at a rate in American that’s twice as fast as Germany. Currently, there are over 20,000 vehicles in the FINN fleet worldwide. The American fleet stands at roughly 2,000 vehicles alone and the goal is to double that by the end of 2023.

Thirty percent of the global fleet are fully electric vehicles while another 20% are plug-in hybrids. In the United States, EV subscription accounts for 14.3% of active subscriptions and the brands want to get that figure closer to the global average. A big help in achieving this goal will be the addition of the Tesla Model Y joining the lineup at the end of this month.

Meier states EV’s are a good business opportunity for them, as they can work with new OEMs to get new models and brands. Without naming brands, there are many interested about FINN’s offering. The FINN program is almost like a six-month test drive; great for someone looking to transition to their first EV.

So far, utilization is high for FINN’s inventory in the US with most new purchases pre-booked. The biggest struggle, as experienced by most of the industry, has been supply. But things are starting to ease for some OEMs.

At current, most users (roughly 85%) are opting the 12-month option. Once the market settles down and inventory is more available, FINN may look at other options, like longer-term agreements, which is a regular request by consumers.

For now, the company looks to grow and expand very deliberately. Future plans include more brands and models, offering new subscription packages, and incorporating new digital features. Constant updates to the platform will occur, focusing primarily on UX improvements. Finally, expansion to the Western and Southern United States are on the radar.

For now, those in the Eastern United States can sign up for a FINN car subscription service and try it out themselves.

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