Zoomcar ZAP Subscribe-fine print explained! [Updated]

March 31 2018 Update: Zoomcar has reduced subscription fee for several cars, some of the policy are updated for better customer friendliness and also has clarified to me over certain policy aspects. Thus I have updated this post based on latest inputs.
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Bengaluru based and India's leading self drive car rental company Zoomcar has introduced its ZAP Subscribe feature, currently operational in Bengaluru and many other big cities. ZAP Subscribe is a provision for individuals to use and experience dream cars without incurring the huge cost involving in owning and maintaining such cars. While their official website does a good job of explaining the program, many of my friends who heard of the program were still not clear how exactly it works. Thus I decided to draft this post, giving overview of ZAP Subscribe program in plain English terms, focusing on areas one should be aware as a customer/subscriber. While most publications ran official press release as is, projecting ZAP Subscribe as a great alternative to buying a car, a detailed analysis of their policy, terms and pricing doesn't look really promising. Below is my detailed analysis of ZAP Subscribe program

Quick Summary of Pros and cons of Zoomcar ZAP Subscribe

Pros	Major Cons
No need for huge initial spending- can have a car for 18k per month onwards. Ideal if you need car for few months only	Maintenance coverage limited to Rs 1 per km (small cars), 1.5 Rs per km for SUVs, this feels adequate to cover most expenses, but do factor a possibility of having to spend little extra on maintenance if it goes beyond the above limit
Possibility to earn some money when car is not in use, by listing it on Zoomcar. If you don't need cars for several days a month, this option may help you recover part of your subscription fee.	Subscriber has to open his/her home as Zoomcar location and spend some time/effort to facilitate bookings (clean the car, fill fuel, handle delivery/collection etc)
Maintenance and insurance expense covered by Zoomcar (up to a reasonable limit, refer post for detail)	Subscriber is responsible for usage and maintenance even when cause could be the Zoomcar customer and subscriber will have to pay fuel & maintenance expense of bookings
	Economics don’t make sense for long term, as subscribers won’t be owning the car even if they subscribe for 2-4 years
	Speed governor, interstate permit issues, GST registration, other terms and conditions

Terminology:

• Zoomcar: Self drive car rental company based in Bengaluru that facilitates the subscription, listing and bookings of self drive cars, details below
• Subscriber: An individual who subscribes for a car from Zoomcar, by paying a monthly rental (of around 18k INR onwards, depending on the car)
• Listing: When a subscriber doesn't need his/her subscribed car for sometime, he/she can list the car on Zoomcar's platform. Other Zoomcar customers will be able to book this car for their personal use, usually for a few days, by paying a daily rent. This rental income is shared between Subscriber and Zoomcar. Subscriber gets 75% and Zoomcar gets 25%, but from the earning subscriber will have to spend on fuel, factor taxes and may be set aside a portion for possible maintenance expense beyond what's covered by Zoomcar
• Booking: Any zoomcar member who wishes to take a self drive car. The car assigned to a booking might be the one subscriber has listed, enabling subscriber to earn a portion of rental paid
• The Original ZAP program: Customers buy a car of Zoomcar's choice and lists it on Zoomcar when they don't need it. In this model customer pays full amount and owns the car, its maintenance, zoomcar shares revenue earned when the car is listed and booked.

What is ZAP Subscribe program?
You will be paying a fixed monthly fee to Zoomcar, known as subscription fee and get to use the car, by paying for fuel and complying with few other terms. Zoomcar owns the car, takes care of maintenance (there is a cap though) and if you don't need the car for few days, allows you earn some revenue by listing the car on Zoomcar platform for other customers to rent from. A rough analogy would be renting a house instead of owning it and then possibly earning some money by listing a bedroom on AirBnB.

What are the subscription fees?
Below are the current subscription fees. A 12% tax applies on top of amount shown in the website. Cheapest car you can take is Tata Tiago, that will cost you Rs 18000 per month. SUVs cost around 40-45k a month.

#	Car	Type	Monthly Subscription Fee + Tax= Total, INR
1	Tata Tiago XM	hatch	16000+1920 tax=17920 Total
2	Ford Ecosport Titanium [Review]	SUV	26000+3120 tax=29120
3	Hyundai Creta E+	SUV	29000+3480 tax=32840
4	Ford Figo Titanium	hatch	20000+2400 tax=22400
5	Tata Hexa XE [Review]	SUV	35000+4200 tax=39200
6	Mahindra Scorpio S5	SUV	35000+4200 tax=39200
7	Hyundai i20 Sportz	hatch	23000+2760 tax=25760
8	KUV100 K4 100 NXT Baleno Sigma	hatch	21000+2520 tax= 23520
9	Grand i10 Magna U2 1.2 CRDI	hatch	22000+2640 tax=24640
10	Mahindra XUV W6	SUV	41000+ 4920 tax = 45920
11	Mahindra TUV300 T6 Plus	SUV	27000+3420 tax= 30420

Electric vehicle E2O P2 is also available for  about 16800 per month (tax included). Actual amount is one rupee less- like 15999 for Tiago, I've rounded it up for ease of calculations.

You can subscribe for 6, 12 or 24 months. Amount to be paid monthly. Termination possible with one month notice.

18k per month is NOT a small amount-why should we subscribe? What is the savings?
Yes, 18k per month for a small car is not cheap. It is 1.5 times the EMI (Tiago XM costs about 5.5 lakhs on road and a 5 lakh, 4 year loan as an EMI of 12k+ per month @ 9% interest). There is a possibility of earning a portion of this subscription fee back, by listing the car on Zoomcar. This earning is what Zoomcar refers to as 'Savings'. If you list a Tiago for 15 days, Zoomcar says you can earn up to 10k (after factoring Tax and fuel expense, as per Zoomcar, subject to bookings, not a guaranteed earning). If this happens your effective subscription spend will be around 8k and you get to use the car for remaining 15 days. The idea of having a car at disposal for 15 days at a net spend of about 8k might be appealing to many, who may not need the car forever and don't want to worry about depreciation, insurance, maintenance and other such hassles associated with owning a car. The subscription fee, earning potential etc varies from car to car. Refer ZAP Subscribe website for details.

The ZAP Subscription scheme might be good consideration in certain scenarios

• If you don't need the car for certain duration, you can list it on Zoomcar platform and let other zoomcar customers book your car. Zoomcar will share a portion of revenue with you. If you need the car for only 15 days a month, remaining 15 days you can list it for others to book- you may earn around 10000 rupees (actual earning depends on multiple factors- weekda/weekend, no of days booking is secured, usage package (Lite, XL etc) and so on). Zoomcar says this earning is after deducting fuel, maintenance and tax component-Tiago self drive rental ranges from Rs 1500 per day (weekday, lite package) to 6800 rupees a day (Weekend, XL package) Of the 15 day listing, assuming your car gets booked for at least 8-10 days including 2 weekends, potential revenue is about 15-20k- after zoomcar's share, fuel and tax deductions, you get to pocket around 10k. This is a rough calculation assuming 60-70% utilization, but demand/supply can vary- you may not get any booking or you may get booking for all 15 days- the risk is on the subscriber. 
• If you need the car for only 10 days, you can list it for 20 days and may earn little more. Note that these earnings are only if someone books your car, which reasonably likely but not guaranteed.
• This possibility of earning some revenue from other zoomcar customers is what is claimed as "savings"
• You don't want to worry about maintenance (Zoomcar's updated policy for ZAP Subscribe covers maintenance expenditure up to Rs 1 Rs per km and tyres are now included). More on this below
• You can change cities or change cars if needed, giving you high flexibility, not having to worry about various hassles that come with car ownership. Taking your own whiteboard cars to other state for long term use requires RTO NOC, fresh payment of taxes etc, which is an extra expense. If you're constantly shifting states/cities, ZAP Subscribe allows you select car in the specific city, which is a bit flexible.

What else ZAP Subscriber should be aware of
1. Fair use policy- subscribers can drive up to 8000 kms per month- roughly 260 kms per day, which feels adequate enough for regular office use and some weekend long drives.  I am guessing this includes kms zoomcar customers consume. If you get a 15 day booking with 300 km per day, that will take up half the quota. Excess km usage will be charged at Rs 1 per km. You will be paying for fuel- yours and customers'

Zoomcar says this limit is fairly adequate for normal usage. I tend to agree.

2. Maintenance covered-but only upto Rs 1 per km for small cars and Rs 1.5 per km for SUVs. If you've driven 1000 kms a month on a small car, any maintenance expense beyond Rs 1000 will have to be paid by you. Initially all ZAP Subscribers will be getting new cars, hence maintenance cost should be less.

A new car needs 2-3 service per year (For Tiago the service schedule is as below: 1st Service: 1500 kms/2 months, 2nd Service: 7500 kms/6 months, 3rd service: 15000 kms/12 months), thereafter every 6 monhts/7500 kms.

First 3 service are usually free services (only labor charge is free, consumables like oil, lubes and any spares/repair need to be paid extra) Zoomcar says they have special tie ups with car dealers to facilitate faster and cheaper servicing of the cars. I am guessing a service expense of Rs 2000-10000 per service, depending on free/paid, type of cars and any incidental repairs/replacements that may be needed (as the car gets old or used a lot, some components will have to be replaced, which adds to service cost)

For Tiago, if used 2500 kms a month (assume 1000 kms self use, + say 8 days of 120 kms per day lite booking & 2 days of 300 kms XL booking), end of 6 months you will need first 3 free services- factoring Rs 2000 per free service for oil, lube n other expenses, looks like this maintenance is well within 1 rupee per km coverage offered by Zoomcar. Service cost escalates as car gets older-hopefully even towards the end of 2nd year long term subscribers won't have to spend much from their pockets. The service expense, subscription fee and earnings will be reconciled every quarter.

Can a subscriber opt out of a major maintenance expense? Yes
I checked with Zoomcar what would happen if there's a major maintenance bill- let us assume after 1.5 years, during a routine maintenance service centre recommends some major replacements/repairs, which let us say cost a lakh rupees- can the subscriber say "I am not interested in these repairs"- yes. Subscriber has an option of giving one month notice and terminating the subscription. Subscription fee for this one month needs to be paid.

For minor dents and scratches, subscribers will have to pay a few thousand rupees as penalty per incident (there's an upper cap of INR 10000, which is good)

3. Speed governor and interstate permit fee: The car will be yellow on black number plate. They are most likely to come with speed governor, which limits the top speed to 80 kmph, as per state government regulation. Also interstate travel will incur extra expense, as state permit fee needs to be paid.[Details] You should factor these.

Update: Interstate permit fee, longer than 1 week is reimbursed by Zoomcar (Himachal Pradesh, AP are few states that issue long term permits)

4. GST Registration required
In order to get input tax credit you'll be required to have a GST registration. Once registered you will have to keep filing returns at regular intervals or pay someone to do it for you.

5. Minimum listing period
Update: Zoomcar has confirmed that there's no minimum listing. Subscriber can keep the car for entire duration without listing even once.

6. Car will be parked at your location during listing
Customers will come to your home/parked location to collect and drop of the car. This may cause privacy issues as strangers will now enter your home/apartment and also there may be a need for you or someone to be present at the venue whenever a customer comes to pickup/collect a car. Zoomcar has remote lock/unlock facility, so human presence not needed- not being present can cause some risks like customer not reporting a new damage etc. But there're some rules like you've to ensure vehicle has 30% fuel minimum, keep it clean etc. Also damages need to be checked after each booking- all these won't happen automatically-someone has to be around to take care of the car- you can't simply list the car and go on say one month world tour. Parking the car at Zoomcar facility will attract extra charge (Rs 400 per day).

7. Check the variant
While some models like Figo and Ecosport seem to have a near top of the line Titanium options, others like Hexa have cheapest variants that miss most of the safety, entertainment and comfort features. Other cars seem to be mid level variants. Do check the variant and ensure you're comfortable with it.

How does Zoomcar benefit?
1. Easy returns. A Tiago XM costs 5.5- 6 lakhs on road. If Zoomcar can get subscribers for 35-40 months, (say one subscriber for 24 months, another for 12) the cost of the car will be recovered. Any subsequent earning will be pure profit. A rental car will have a decent running life span of at least 3-4 years. Zoomcar can get their initial money back in first 3 years, earn more for another year or so and then sell off the car and keep the sale value too. Of course some amount has to be spent on insurance, maintenance, personnel cost and other things, there is a risk of not getting a subscriber. With revised subscription fee it does look like fair model.

2. No need to spend on parking space and fleet executive. Subscriber's house now becomes delivery centre. Reduced operating expenses. Subscriber will ensure car is clean, filled up etc.

3. Limited maintenance liability- Any maintenance expense beyond Rs 1 per km will be recovered from customer. Zoomcar feels this cap is reasonable and based on their current experience as to how much each cars cost to maintain. Seems fine to me at this stage. As cars get older or as subscriber's actual experience/expense details come in we can revisit this.

4. Get to pass risk of low utilization to subscriber- Once Zoomcar gets a subscriber, monthly income is guaranteed. If the subscriber lists the car but no one books, the loss is for the subscriber (Zoomcar guarantees a payout of 10000 if listed for 20+ days including all weekends- this is like giving 10k back from 18k customer has paid to use the car for just 10 days). Zoomcar says so far they didn't have the need to invoke minimum guarantee- ZAP associates made more than minimum guarantee all the time.

Is ZAP Subscribe a great option instead of buying?
ZAP subscribe is possibly a good option in following scenarios
1. Your need for a car is short term- say few months only. May be you're moving cities or going abroad etc- then subscribing could be better (spend 108k on 6 month subscription with a possible 50k earnings (net spend 80k) instead of spending 6 lakhs on a new Tiago car and then sell it for say 5/5.5 lakhs)

The economics might be attractive for expensive cars- instead of spending 15 lakhs buying a Creta, spending 2 lakhs on 6 month subscription might be tempting to some, if the need is for few months only.

2. Your need for a car is only for few days a  week. You can hope to earn a part of your subscription fee back by listing the car on Zoomcar platform for others to book

3. You don't want to spend a huge amount upfront as down payment but comfortable paying a monthly subscription fee which could be 1.5x EMI (and you won't be owning the car)

Zoomcar promises a guaranteed payout of 10k per month if you list it for minimum 20 days per month. Zoomcar claims this 10k is after factoring fuel, tax and maintenance. This means you'll be paying about 8k for 10 days or Rs 800 per day. You may wish to evaluate other options like Uber/Ola or try Zoom Commute, the weekday subscription model which might be more convenient for some of you.

How does long term mathematics look like?

Below is an illustration for Tata Tiago- 2, 4 and 6 year expenditure comparison for TIAGO XM Diesel bought on 4 year loan (1 Lakh DP, 5 lakh loan) vs ZAP Subscribe. On road price of Tiago XM Diesel is close to 6 lakh rupees.

#	Factor	Case 1: Loan Purchase	Case 2: ZAP Subscribe	Case 3: Buy without loan	Remarks
1	Initial Spend (Down payment)	1 lakh approx.	NA	6 Lakhs
2	Monthly spend (EMI/Subscription Fee	12300 INR (as per Carwale EMI Calculator at 8.5%	18000 INR	-
3	Approx Maintenance spend	7k insurance 15k tyre change 23k other maintenance=55k /year	If used 4000kms a month, expenses upto 48k/year is covered by Zoomcar, let us assume 7k extra spend	55k per year	Cheaper during initial period, expensive as car gets old
	Earning potential, when car is not in use	0	Assuming car is listed 1 week per month, earns 5k per month or 60k per year. More if you can list longer	0
End of 2 years
	Total Spend	1 lakh + 2.95 (EMI), 1.1 maint = 5 lakhs	4.32 lakhs (Assuming zero maintenance)	7.1 lakhs
	Total Savings /earning	-	1.2 lakhs (Estimated)	-
	Net spend	5 lakhs	3.1 lakhs	7.1 lakhs
	Pros	No speed, usage limits or interstate fee	High flexibility- to change cities, list car for longer, change car etc	No speed, usage limits or interstate fee, can sell the car anytime
	Cons	Relocating to other cities needs repayment of tax, no earning when car is idle	Interstate permit cost extra, 80 kmph limit (Speed governor installed)	Relocating to other cities needs repayment of tax, no earning when car is idle
End of 4 years
	Total Spend	5+3+1.1=9.1 lakhs	8.64 lakhs	7.1 + 1.1 Maint=8.2 lakhs
	Total Savings	-	2.4 lakhs	-
	Net	9.1 lakhs	6.24 lakhs	8.2 lakhs
	Pros	Loan is cleared, no more EMI, option to sell the car		Can customize the car at will, chose other variants if reqd
	Cons
End of 6 years
	Total Spend	9.1 +1.1=10.2 lakhs	13 lakhs	8.2+1.1= 9.3 lakhs
	Total Savings	Resale value= 2.5 lakhs	3.6 lakhs (earning from listing) 7.2 lakhs (if listed for 15 days a month	Resale value= 2.5 lakhs
	Net	7.7 lakhs	9.4 lakhs (if listed for 7 days a month) 5.8 (if listed for 15 days a month)	6.8 lakhs
	Pros		Assuming earning is well, net spend might be less than ownership cost You still don’t own the car
	Cons		Earnings not 100% guaranteed, there could be other expenses (CA fee for filing GST returns etc)

Assumptions:

Above illustration assumes when you buy a car you won’t earn anything when it is idel. May be you can earn a bit by listing it on some platforms or renting to friends

Above illustration assumes you list the car for one week every month when subscribed. If you can list for 2 weeks, the savings may double and you may save more.

Subscription fee may increase after a few years

Assuming maintenance cost is constant-in reality it will be lot less earlier and will be lot more as the car gets older.

There’re lots of variables, so please recalculate the above with the scenario/numbers you have in mind.

My feedback on the ZAP Subscribe program

1. Six month minimum subscription duration seems bit long. Giving a shorter duration like 2 or 3 months will give more flexibility to customers who are in a city for short duration. But this should be fine, as you can subscribe for 6 months but terminate earlier with 1 month notice, if required.
2. Display tax included price for better clarity
3. Disclose hidden items like speed governor/speed limits, interstate permit fees, major maintenance expenses like replacements if any etc

Thanks to Zoomcar for providing additional clarifications on this post.

Let me know what you think of this ZAP Subscribe program. Attractive? Rival Revv had launched a subscription model called Switch sometime earlier. I had written a detailed review of Switch but now they've changed pricing model a bit, so I need to update my post soon. (Revv only lets you rent, no option to list and earn some money back like in ZAP Subscribe.

Disclaimer:

All numbers are estimated and given for illustration purposes only. There’re lots of variables which are hard to predict and numbers change drastically based on individual case. Please re-do the math for your specific requirement and figure out the best option after your own due diligence.

All terms and conditions, policies as available at the time of writing this post. Terms are subject to change, please cross check latest applicable terms and policies on ZAP Subscribe official website before final decision.

July 2020 Update: Given the current pandemic situation it might make more sense to buy a used car with buyback guarantee. Check this post for details