Innovation through Subscription: Kinto One by Toyota

Toyota Motor Philippines wants to innovate the concept of mobility with Kinto One; the nation's first subscription-based mobility solution from the country's largest automaker.

Subscription may sound unusual for automobiles, but almost everyone has already embraced subscription-based media streaming. Hardly anyone buys DVDs/Blu-ray discs anymore, and only a handful of enthusiasts (still) collect CDs and (vinyl) records.

How does Kinto One work? Before we discuss the modern practice of vehicle subscription, let's examine its predecessors: car rental and car leasing.

What is the difference between a rental and a lease?

Auto leasing is a long-term arrangement (usually two to five years) that started in the early 1900s as a spin-off of the short-term (typically days to months) car rental system.

The company covers the rental's repair and maintenance, and users can return the vehicle at any time during the contract period. Renting a car has lower upfront costs but a higher per-day price than a leased vehicle.

A lease ties you up for several years, and while the vehicle is insured, users are responsible for repair fees and maintenance expenses. It is generally cheaper than buying a car, but has a higher overall cost than renting due to the down payment.

Both systems allow users to deduct lease or rental payments from their taxes if they are self-employed or the vehicle is used for business purposes. Any form of customization on leased or rented vehicles is strictly prohibited. Users cannot change the wheels, replace the speakers, or change the head unit.

What is the latest trend called 'vehicle subscription'?

Like a rental or lease, 'subscription' provides motorists with a loaner vehicle for a specified amount of time, whether for personal use, a perk package at work, or business.

But unlike a rental or a lease, a 'vehicle subscription' gives its members a similar worry- and hassle-free feeling to those experienced by subscribers of online video and music-streaming services. It has an all-inclusive monthly fee that covers usual expenses such as taxes, insurance, repairs, and maintenance. If streaming apps let you simply click and watch or listen, a vehicle subscription is as simple as gas and go (provided you are a duly licensed and responsible driver).

Vehicle subscription services in other countries not only offer all of the above, but some are more flexible, allowing for individual needs and demands to be met, such as changing car models on demand and even an app for easier accessibility.

Ownership Culture in the Philippines

Filipinos have a very strong ownership culture, especially regarding vehicles, so leasing has never really taken off, despite efforts from auto brands, manufacturers, and distributors since the early 2000s. Almost all young people have 'buying a car' in the top five of their bucket lists. 

There are two primary reasons why ownership culture is particularly strong in the Philippines. The first is sentimentality. Buying your first vehicle is an 'adulting' thing and is considered a rite of passage or, for some, a signal of newfound status, which gives the vehicles a heavy dose of sentimental value. The second is how a vehicle is seen as an asset that can be sold to finance the next purchase or when funds are needed.

But, as the idiom goes, change is good. And the key to change is understanding and the willingness to adapt. That is why people who used to buy CDs probably still do, just to expand their collection, but you don't see them driving a car with a CD player. And while there are still flicks available on Blu-ray discs, the next generation of movie watchers is more adept at navigating Netflix than operating a Blu-ray player.

Vehicle subscription is all about ease of use, which is what makes streaming services so appealing. Yes, you can still buy your CDs and Blu-rays, but if you want your music and movies on the go and at your fingertips, nothing beats an app. Want to switch to a different Toyota model every few years? Kinto One is the key.

Kinto One could change the culture of ownership to usership 

Toyota Motor Philippines launched Kinto One, a full-service vehicle leasing program, in 2020. While its mileage cap is something you also see in leasing agreements, look closely; it has many similarities with a subscription service. 

First, there is no down payment (although a security deposit equivalent to 10% of the vehicle's Suggested Retail Price is required). That's still significantly lower than the 20% auto financing down payment. Second, the fixed monthly fee covers PMS, replacement of normal wear and tear parts, annual comprehensive insurance, roadside assistance, and vehicle registration. It even has a Kinto concierge who will remind its customers about scheduled service appointments. Toyota is currently updating the system to provide more features in the future.

How does it differ from the average leasing service, here or abroad? A typical lease does not include free items such as annual comprehensive insurance, vehicle registration, and replacement of normal wear-and-tear parts (including brake pads, tires, batteries, and air conditioning maintenance).

Just like when you plop down on the couch after a hard day's work and swipe across your favorite genre of TV shows to find a series to binge on, wouldn't it be nice to browse Toyota's lineup of vehicles every few years and swap between a Corolla, a Fortuner, or a Hilux just because you can? Sure, you can do that as a car buyer, too, but it doesn't come close to how easy it will be as a Kinto One subscriber.

What will the process be like as a vehicle owner?

Considering you buy the Corolla Cross 1.8 V HEV CVT, which retails for PHP 1,789,000. In its third year, it will be worth just a smidge over one million pesos. You will have negative equity by then, amounting to Php 268,971, because your loan balance will still be Php 780,456. In the fifth year, after you've fully paid for the vehicle (and are ready to sell it), it'll only be worth a little over Php 700K. Of course, this is only a rough estimate. Factors such as market conditions, the economic landscape, make, model, and mileage play huge roles in determining the final price of your Toyota.

Now, it is time to face hagglers, low-ballers, and their technician/mechanic (wannabe) sidekicks in the second-hand market. If you don't know your car terms, components (and how often they get replaced), etc., you can easily get suckered into a bad deal by anyone brandishing an online OBD (Onboard Diagnostics Scanner). You can go to third-party buy-and-sell groups, but be prepared to lose at least 5-10% off your asking price. 

After you buy and sell your first vehicle, it becomes a cycle; eventually, it becomes a hassle. You'll never have to go through all that in a user-centric culture.

When your three- (36 months) or four-year (48 months) subscription is up, renew just like you do with Spotify or Apple TV+ for another three or four years and drive the next model of choice – hatchback, sedan, MPV, SUV, crossover, van, or a pickup – take your pick. It sounds easy and hassle-free, because it is.

Is Toyota's Kinto One for you?

If you're already subscribed to any online streaming services, opening your mind to this new mobility concept isn't like hunting down your third eye.

We understand that it takes a while to grasp because of the complexity. Still, the cost-effectiveness of a vehicle subscription system is more than enough to force a practical motorist to sit down and give their due diligence. 

Kinto One and its lighter vehicle subscription sibling, Kinto One Lite (Low-mileage of 10,000 km/year and has all the benefits of the regular Kinto One option minus the 'wear and tear parts replacement'), now lets you drive a brand-new car every three to five years, absolutely hassle-free. Are you ready to subscribe?