Car subscription: €850 a month vs €195 for owning a car

A Volvo S60 subscription costs €850 a month; owning a car, €195

A plug-in hybrid petrol Volvo S60 replaces a petrol Alfa Romeo Giulia Veloce with 100,000 kilometres on the clock in four years. The deal is signed on a subscription basis and costs €850 a month, according to the person who started the thread. With that starting point, the question is not whether the car is good, but who really foots the bill for driving a new car every four years: the person driving it or the person buying it and paying it off.

The discussion quickly split into two camps: subscription as a tax tool for the self-employed and companies, and subscription as a consumer product for private individuals. In between, a list of monthly payments and a fifteen-year calculation that deserves a careful look.

What does it really cost to keep a car for fifteen years?

The most detailed counterexample starts with a €17,500 car paid for up front. Adding up the purchase, roadworthiness tests (nine inspections at about €50 each), insurance (an average of €550 a year, now €300), road tax (about €50 a year), maintenance (an average of €300 a year, with the first five years at the dealership under warranty), repairs (€500 for a clutch, €400 for an alternator, €300 for a brake caliper), tyres (seven sets at about €250 each) and three minor incidents (€1,000, €250 and €400), the total comes to €35,150.

Spread over 180 months, that works out at €195 a month. The figure is the crux of the comparison and should be read with the caveat from the person who did the maths: it is an estimate for a specific case and probably misses some items. The difference with the Volvo's monthly payment is no joke, and the forum user himself admits he has left things out.

What monthly payment is normal for a car subscription?

The figures that come up in the conversation help gauge the market. An Ibiza on subscription comes to €238 plus VAT, that is, €287.98 a month. A flexible subscription for an electric Fiat 500, available from one month, costs €1,189.49 a month. A company car on subscription, for professional use, sits at around €650 a month.

The range is huge because the product is not the same: the model, mileage, term, included maintenance and, above all, who can deduct the expense all vary. Some argue that for a company with sales reps who are constantly on the road, or for technical work that requires daily city travel, the deal makes operational sense. For a private individual, the comparison is always against the same paid-off own car. Behind it all lurks a line that sums up the era: you'll own nothing and be happy.

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VAT and deductions: where subscription gains ground

The tax argument is what, according to several participants, really tips the scales. For a passenger car, the thread argues, a self-employed person or a company can deduct 50% of VAT and of the monthly payments, exactly as if they bought the vehicle and depreciated it over four or five years. Raising that percentage requires proving exclusive professional use, something difficult to substantiate and which opens the door to a tax inspection.

Some go further and claim that a registered sales agent can deduct 100% of the vehicle's costs. The claim comes with the usual caveat: the status of sales agent has its own regulations and definition, and some dispute that everyone who sells insurance, phone services or energy fits it. Another view holds that the boundary between a registered sales agent and a simple salesperson is set by the type of client being invoiced, not the card you show.

Another practical warning that is often overlooked: a forum user warns that a credit line should not be used to buy vehicles or machinery. When the bank detects that use, renewing the line becomes complicated just when the company needs it most.

Depreciation decides depending on the car's segment

Not all cars depreciate equally, and that reshuffles the debate. A small car loses between 10% and 15% of its value in the first year. A Mercedes S-Class or a BMW 7 Series can lose between 25% and 30%. The higher the segment, the greater the relative depreciation and the more ground subscription gains over buying.

The logic is simple: if the car is going to lose a quarter of its value in twelve months, financing its use rather than its ownership becomes more attractive. The lower the segment, the lower the relative depreciation and the more weight other factors carry.

Professional use and where the calculation gets stuck

One scenario almost nobody disputes: a company that avoids tying up capital and puts the money it doesn't spend on the car into its own business. That capital has an opportunity cost and also a return. This is where the comparison hangs.

Nobody puts on the table how much the money not tied up in the purchase actually earns. Without that number, subscription is a convenience decision with an extra cost and buying is a wealth decision with a hidden cost. The person who started the thread already warned that they don't intend to share their finances, so the last cell in the spreadsheet is left blank.