Car-as-a-Service in the Netherlands

By Casper Veenman

Over the past decade, the Car-as-a-Service (CaaS) market in the Netherlands has evolved from just business lease. It has grown significantly as technological innovation and changing consumer preferences have transformed car access and usage, and now includes private lease, subscriptions, sharing, rental, ride-hailing and carpooling. We have two key observations about these market developments.

#1 The CaaS market has not disrupted the traditional outright purchase model, but it still presents potential for growth.

Even in a country like the Netherlands, which its seemingly ideal environment for flexible car services, a large-scale shift from private ownership towards service models has not materialized. Nonetheless, the demand for flexible and convenient models is likely to increase, among others driven by shifting consumer preferences, high purchase prices of (electric) vehicles, and policies supporting flexible ownership.

#2 The boundaries between CaaS segments are beginning to blur.

Propositions of the various flexible models are becoming more similar in suppliers' pursuit of scale and the introduction of new technological advancements that lower entry barriers. The result is a fragmented and highly competitive market in which innovation is becoming increasingly important in standing out from the crowd.

Our view on the CaaS market in the Netherlands

#1 The CaaS market has not disrupted the traditional outright purchase model, but it still presents potential for growth

The rise of various Car-as-a-Service (CaaS) propositions has not yet convinced the wider public to move away from private car ownership. Outright purchase remains the dominant mode, with two-thirds of all new private registrations. Currently, more flexible models such as car sharing, subscription, and rental function mainly as supplements rather than replacements for private ownership. Even in the Netherlands, where conditions like high population density and space constraints seem favorable, a combination of behavioral, policy and business factors maintains the prevalence of private ownership. For a significant shift to occur, policymakers, businesses and consumers must collectively adopt innovative approaches. Nonetheless, demand for more flexible and convenient models is anticipated to grow, driven by the preferences of generations Y and Z, who value convenience and are accustomed to the subscription economy. Additionally, high purchase prices of electric vehicles and policies favoring flexible models, such as reducing urban parking spaces, are expected to attract more customers to these alternative options .

Private lease is not taking over all private sales. Private lease emerged as a game changer when it was introduced in 2012, quickly capturing a significant share of the market. By 2020, it accounted for 42% of all new private car registrations. Although the number of contracts increased by 7% p.a. between 2019-2023 to 245 k, its share of registrations dropped to 34% by 2023, driven by high inflation and rising interest rates from late 2021. These economic pressures weakened consumer confidence and purchasing power, making long-term, high-cost lease contracts less appealing.

Subscription services have gained traction. Car subscriptions, which began around 2017, offer a flexible alternative to traditional leases with their shorter contracts, often allowing monthly cancellations. While there were about 16,000 active contracts in 2023, this model is set to grow and compete with private lease for market share.

Car sharing has grown exponentially but struggles with profitability. Car sharing, which includes B2C roundtrip, B2C free-floating, (keyless) P2P, and closed community models, has experienced exponential growth, achieving a compound annual growth rate of 36% since 2019. Despite this substantial increase, it is still a niche market with approximately 17,000 vehicles in operation as of 2023. Profitability continues to be a significant challenge, as no major participant has reached the necessary scale to report positive financial results.

Car rental remains a mature and well-established segment. Car rental is a mature market in the Netherlands, with ~65,000 passenger rental cars, predominantly and increasingly controlled by a few (international) companies. Before COVID-19, the market saw modest growth at ~2% p.a. between 2017-2019. After a 16% decline in 2020 due to COVID-19, the market fully rebounded by 2022. Going forward, demand for rental passenger cars is expected to rise, driven by an increase in tourism in the coming years on top of the same trends that apply for the above-mentioned models.

#2 The boundaries between CaaS segments are beginning to blur.

Flexible models have found their right to play in catering to the consumer’s need for more flexibility and convenience. In response to this growing demand for such propositions, a range of players have entered the market, including traditional leasing and rental companies, OEMs, and specialized service providers. The result is a fragmented, highly competitive market, with many players offering similar propositions to reach the same customer.

Service providers are expanding into new segments. To protect and grow revenues, players are tapping into new segments by broadening their service portfolios. Traditional leasing companies have been pushing for short lease, which is in fact the equivalent of the car subscription model. Car sharing companies have started offering monthly packages to their customers. Rental companies are starting to offer car sharing-like propositions by adopting (new) technology such as keyless entry, or are even offering comprehensive mobility platforms that integrate services such as rental, sharing, and ride-hailing.

Innovation is the way to differentiate. With blurred boundaries between models, and players offering more of the same, differentiation becomes more important in staying ahead of the competition. Besides competing on price and offering discounts to lure in customers, players have started reinventing their models, for instance by adding more flexibility to their propositions. Private lease companies are partnering with car sharing platforms to enable their customers to share cars and save on their monthly costs. Or take Lynk&Co, an OEM which allows its customers to share “their” subscription car with others via its own app.

Our recommendations

1. Individual players should not bet on a complete paradigm shift towards flexible ownership.
   Enabled by government policy, infrastructure and business models, most consumers still prefer private ownership. Without intensive effort from all stakeholders involved, this is not expected to change radically. Therefore, individual players should not bet on such a significant shift in their strategies, but rather anticipate a gradual evolution where private ownership coexists with more flexible models.
2. Players should proactively drive market consolidation to create scale and remain relevant.
   With increasing competition in the CaaS market and profitability under pressure — particularly in niche segments like car sharing — industry players must shift toward integrated mobility platforms. These platforms are far more relevant to consumers than isolated single-service offerings, as they provide a seamless and comprehensive range of mobility solutions to meet diverse needs. Early signs of this consolidation are already emerging. For players that do not integrate into larger platforms, either through acquisitions or partnerships, their viability and relevance are likely to fade significantly in the coming decade.
3. Players should innovate to win in the CaaS market.
   To stay on top of the competition, innovation in propositions is key to differentiation. Understanding changing consumer preferences towards convenience, flexibility and costs is crucial to keeping and winning over customers amidst the myriad of choices at their feet.

Roland Berger has extensive experience within the automotive sector . If you need support on this topic, please do not hesitate to contact us.