More and more people seem to share our belief — that the future belongs to ownerless cars. Take a moment to read the great article via ICAEW.com about the exciting future of subscription services ahead of us.
Len Jones explores whether sharing, or paying as you go, could be the key to happiness for both car manufacturers and consumers.
The future of personal transport needs
a paradigm shift from the car being a symbol of affluence and prestige into one of mobility as a service, so that car ownership aligns with companies that do not specifically make anything. These companies deliver other products by subscription, such as Netflix, Spotify, Uber and Deliveroo.
This is what some sociologists call millennial thinking — subcontracting the responsibility of ownership to a third party that then deals with issues such as insurance and maintenance. With the changing mood towards pollution and the additional cost burden of car ownership, this could be a welcome solution to the norm.
NOT JUSTIFIED BY ROI
Taking a purely rational return-on- investment approach would very likely result in cars not being purchased in the first place. Who needs a rusting hulk of metal sitting outside the house most of the time, being used no more than a few hours a day (or much less for many)? We buy cars as they are convenient and we like the idea of the freedom they offer, but the real tangible benefit over its useful life cannot really justify the cost of an upfront purchase. New cars, just by being driven off the forecourt, lose a large portion of their value.
The future will involve more eco- friendly vehicles and also is likely to include shared ownership. This is a real opportunity for the automotive industry to embrace new concepts, although it is likely to reduce the number of vehicles in production.
Some manufacturers have already started to adopt this model — Cadillac, for example, has introduced a pay-as-you-go model in New York. The $1,500-a-month luxury car subscription service launched earlier this year and allows members to swap out different models of high-end saloons and SUVs.
THE EVOLUTION OF OWNERSHIP
As we head into the future, new models of ownership will evolve. Not only will mobility be a service, but it will be a monetised service not exclusively limited to the manufacturer or traditional lender. In short, the notion of “access rights” will come into play.
If we accept that cars should no longer be given superstar status, and as access to short-term finance becomes easier, more consumers will welcome the idea of a temporary vehicle that is theirs for a short time — rather like hot-desking at work. By selling access to the asset rather than the asset itself, manufacturers will remain responsible for the life cycle of vehicles. Accumulation of statistics on use of a vehicle over its life will enable manufacturers to adapt their approach to the market and improve the profitability of the enterprise.
Some manufacturers may even create multiple ownership whose identities and shares in the vehicle can change in real time. Car dealers may become a thing of the past as manufacturers rent services directly to consumers. This
would also entail vehicles having detailed cost benefit analyses and real-time information, which would in turn lead to better utilisation and minimisation of running costs.
Creating value by adding services to products, or replacing a product with a service, has the potential to unlock new revenue streams and cost savings for manufacturers and distribution partners. We may not see ownerless cars just yet, but we will definitely see reduced levels of ownership.
