The role of cars in our lives (pt III)
Part 3 of 3: Redefining our relationship with cars
The impact of private cars on developing countries
It’s easy to spot a correlation between countries that have achieved economic prosperity and those whose citizens have enjoyed higher rates of car ownership. So maybe the car loans aren’t so bad after all, right?
An interrogation of causality aside, the thing to be mindful of is that the rate of car ownership is just a proxy for the inclusiveness of a country’s mobility. Today, there are better ways to deliver private cars to the masses without the use of dangerous financial products like car loans.
The mobility cars can deliver undoubtedly plays a hand in transforming the trajectory of economies and will continue to be a key part of the evolution of global mobility.
In upper income developing countries like South Africa, Mexico, Chile and Brazil, the vast majority of the population still do not have access to a private car. While these countries are amongst the most prosperous economies in their peer group, their level of private car access for citizens remains a far cry from their wealthier developed market counterparts like the U.S. and the U.K.
For the financially included minority in these developing countries, the propaganda driving car buying decisions today is consistent with the messages constructed by Edward Bernays. The messages maintain a firm grip on us, with car loans seen as the most practical means through which we can instantly serve our desires.
Remember the “blowfish effect”? Perhaps it’s time we got some honest packaging for these car loans to break the mental chains.
Is there an alternative blueprint?
If we compare cars to airplanes, imagine how much less inclusive air travel would be if only those who were able to buy a plane could fly today. Unlike with cars, the mismatch between human life expectancy and the price of a plane meant that the aviation industry had to think more critically about how to catalyze mass market air travel.
Thanks to the Jumbo Jet (technology), deregulation (laws) and the proliferation of airline startups (business) in the 1970s to 1980s, we now enjoy mass air travel as a service. We’re happy to rent a seat when needed, sit back and leave the operations, financing and risk management of planes with service companies (a.k.a airlines).
Airlines are incentivized to constantly seek out and remove inefficiencies in a quest for greater margins and market share. Countless airlines around the world compete on price and experience to convince you to sit aboard their $100m giant bird for a 10,000km voyage across the world. Today, that plane ticket costs less than it would to travel the same distance in a new car — never mind the fact that most people don’t want to spend two weeks driving to their holiday destination.
Airlines became the service layer between the plane manufacturers (Airbus, Boeing etc) and travelers. There is no clear equivalent service layer for cars. While one could argue that the rental and leasing companies serve this role, as a proportion of the more than 1 billion cars we have on the planet, their fleet size pales in comparison to the number of cars funded by the auto loan industry — a stark difference from the service-driven model of airlines.
What cars mean to us now
Cars are the perfect lifestyle product for any marketer, marrying a basic modern need (mobility) with the insatiable desire to please our ego. Alongside the home, cars are a key part of how we’ve learnt to construct and communicate our lifestyles in a world of consumerism.
For the majority of people, these two lifestyle fundamentals (cars and homes) account for more than 50% of their monthly household spending. South Africa is no different, with the average household having 54% of their spend go towards where they live and how they move across their cities.
What’s interesting is that when it comes to these two lifestyle fundamentals, more and more people around the world are starting to trade the burden of responsibility for greater flexibility and convenience. “Buying” is no longer the unchallenged default.
The era of “Life-as-a-Service” is upon us and it’s becoming increasingly possible to vary our lifestyles on-demand. In just a few clicks, we can be chauffeured across our city in a luxury car, experience upscale loft apartment living for a few days or summon the best Sushi in town to our doorstep for the night. The duration over which we sustain these lifestyle choices is a function of our budgets, which should ideally not be driven by debt.
Lifestyle is no longer limited by the binary construct of “rich vs poor”, but rather a broad spectrum with multiple points we can now travel across instantly thanks to technology. A salary increase today and you can supersize your lifestyle tomorrow at the tap of a button — true tech-enabled lifestyles.
Instantly changing where we live and what we drive to suit our pockets.
So what’s next?
It’s possible to serve consumers and keep auto production volumes high, without disingenuously selling the fallacy of car ownership. It’s possible to deliver everything we’ve come to expect from cars, without the burden of car loans. Most customers are already accustomed to paying monthly for cars and value the private use of cars, positioning car subscriptions as a catalyst for a future of democratized mobility.
Car subscriptions deliver the flexible access to the car of your choosing, for as long as you want, to travel as far as you’d like, without the crippling debt to match. They hold the power to usher in this future if structured in the interests of the end user, which car loans are not.
A new generation of car subscriptions will likely emerge across countries with higher levels of mobility inequality. These subscription services will drive the next phase of mobility inclusion, finally making the car loan obsolete and laying the foundation for the democratization of private car usage around the world.
