What to expect from car subscription models in 2026
- Written by By Nick Boucher, CEO and Co-Founder of Karmo
Car ownership hasn't changed in over a hundred years. Australians buy or finance a vehicle, commit for years, absorb depreciation and manage the ongoing costs. Today, that model is being steadily re-examined by consumers and businesses alike.
As we look ahead, car subscriptions are moving beyond their early-adopter phase and into the mainstream. This shift is being driven by a multitude of forces including; cost-of-living pressures, changing attitudes to ownership, accelerating EV adoption and a growing preference for flexibility over long-term commitment.
Karmo is at the forefront of this shift, having seen the demand for our subscription services increase by over 500 per cent across the past three and a half years, underlining a structural shift in how Australians access vehicles.
Flexibility is no longer a nice-to-have
One of the clearest signals in customer behaviour is a move away from rigid, long-term arrangements. Customers want options that can evolve with their circumstances, whether that is a growing family, a new job, a relocation or shifting financial priorities.
Car subscriptions respond directly to this demand. Think of car subscription as similar to a lease, but with a shorter commitment and the flexibility to change or refresh your vehicle during the subscription period, rather than being locked in for years.
As flexibility has become a baseline expectation across many areas of life, from streaming to housing to work, it is only natural that mobility is following the same trajectory.
Cost-of-living pressures are reshaping car decisions
Potential future interest rate rises, higher household expenses and ongoing economic uncertainty are also influencing how Australians think about cars. Large upfront deposits, balloon payments and unpredictable running costs are increasingly at odds with the desire for clear and manageable budgeting.
Subscription models bundle expenses such as registration, insurance, servicing and maintenance into a single weekly payment. For many consumers, this cost transparency and predictability is becoming just as important as the vehicle itself. Over the next 12 to 24 months, we expect financial clarity to play an even greater role in driving adoption.
How salary packaging is opening up flexible car access
Novated vehicle leasing has exploded over the past 20 years and has changed the way Australians think about car access. Through our partnership with Smartgroup, Karmo is expanding the novated offering with access to car subscription through salary packaging, enabling more employees to access newer vehicles via pre-tax income. This model combines the budgeting benefits of novated arrangements with the flexibility of subscription, reducing the long-term commitment and residual value risk traditionally associated with leasing. For employers and employees alike, the partnership broadens access to modern vehicles while aligning flexibility, cost certainty and evolving workforce expectations. Over time, novated subscription will help grow awareness of car subscription and strengthen trust across the sector.
EV adoption will accelerate subscription uptake
Electric vehicles present a significant opportunity for car subscriptions. Interest in EVs continues to rise with over 100,000 battery electric vehicles and 53,000 plug-in hybrids sold in 2025, they now account for 13.1 per cent of new car sales. Despite this 38 per cent increase in sales uncertainty around depreciation, battery life, resale values, charging infrastructure and the pace of model innovation remains a barrier for many buyers. In particular, the pace and scale of EV depreciation is difficult to predict, creating concern about potential value loss as technology and model ranges continue to evolve.
Subscriptions reduce this risk by allowing drivers to experience electric vehicles without long-term commitment. As more EV models enter the market and government support for electrification continues, subscriptions are likely to become a preferred entry point for first-time EV drivers. They present a natural bridge between rising interest in EVs and long-term ownership.
Changing consumer behaviour is redefining ownership
Perhaps the most fundamental shift is cultural. While broader research often points to younger generations placing less emphasis on ownership as a marker of success, Karmo’s data suggests the strongest demand for flexible car access is coming from Australians aged 35 to 50. This cohort typically has a clearer understanding of the true cost of vehicle ownership and a greater need for flexibility as work, family and lifestyle requirements evolve. For them, access, convenience and adaptability increasingly outweigh the appeal of long-term ownership.
This shift is reflected in how vehicles are being viewed. Cars are being viewed more as a service than an asset, particularly in urban environments where usage patterns vary and alternatives such as rideshare and public transport coexist. Subscription models align naturally with this evolving definition of mobility.
What the next phase looks like
Looking ahead, car subscriptions are expected to become more deeply embedded within mainstream automotive and financial ecosystems. We are likely to see broader vehicle choice and deeper partnerships with financial institutions, as innovative dealerships and manufacturers work alongside experienced tech-enabled companies like Karmo. This collaboration will allow them to offer more than just a finance payment or drive away price and bring in a whole new revenue stream through subscription. This will then see an increased adoption across both consumer and business segments.
Data will also play a growing role. As subscription providers develop richer insights into usage patterns and customer preferences, offerings will become more personalised and responsive. For drivers, this means better alignment between what they pay for and how they actually use a vehicle.
Car subscriptions will not replace ownership entirely. However, as flexibility, affordability and choice continue to rise in importance, they will increasingly sit alongside traditional models as a credible, mainstream way to access a vehicle.
After several years of sustained growth, 2026 is shaping up as a tipping point for car subscription models, as economic conditions and consumer expectations increasingly favour the flexibility they offer.
About Nick Boucher
Nick Boucher is the CEO and Co-Founder of Karmo, Australia's largest car subscription provider, revolutionising the way people access vehicles by offering a flexible alternative to traditional car finance, operating leases, long-term rentals, and rent-to-own. With more than two decades of experience in the automotive sector, he launched Karmo in 2019 with a clear vision to make car ownership more accessible, convenient, and flexible to every stage of life.
Over the past three years, he has driven 470% growth, expanded revenue by 675%, and secured a $138M debt facility from the finance arms of Volkswagen and Toyota. In addition, he spearheaded the acquisition of Motopool, cementing Karmo’s market leadership, which now generates $60M ARR and was recognised as a as a finalist in the 2025 Brisbane Lord Mayor’s Business Awards, as well as placing in the 2025 Deloitte Tech Fast 50 in the SmartCompany’s Smart50.
About Karmo
Established in 2019 by Nick Boucher, Karmo is the largest car subscription provider in Australia, proudly leading the market with a commitment to redefining the car ownership model. Our commitment, with innovation at our core, is to provide our customers with the highest-quality service which includes our premium new car subscription model through to our very own pioneering car subscription software designed to provide our customers with a seamless subscription experience that is unique to Karmo.
We believe that accessing a car should be affordable, convenient, and flexible, which is why we have meticulously crafted a subscription model that adapts to your lifestyle and business needs. With the ability to regularly swap vehicles, Karmo provides a flexible and budget-friendly alternative to traditional car ownership.
Karmo was recently named a finalist in the 2025 Brisbane Lord Mayor’s Business Awards in the ANZ High-Growth Business category. We achieved #35 in the 2025 Deloitte Tech Fast 50 and an impressive #12 in SmartCompany’s Smart50, recognising our continued commitment to redefining and enhancing the car subscription experience.
