Future subscribers

by Steve Nash
08 Nov 2018
Future subscribers

After quite a long and consistent period of growth the new car market is encountering a number of headwinds. These include the dieselgate-led decline in diesel sales – not yet compensated for by sales of petrol or alternative-fuelled vehicles; the effects of WLTP and the distortions it has caused in the market; and the economic uncertainty resulting from the ongoing Brexit negotiations.

Naturally, it is the job of the manufacturers to look beyond short-term market turbulence and entice customers with new and innovative vehicles such as those shown in abundance at the recent Paris Motor Show. Much has been said about electrified, connected and autonomous vehicles, but there is increasing debate concerning the future of vehicle ownership too. The growth of leasing products, such as PCPs, has already had a significant impact allowing more people to access new vehicles and to be able to change them more regularly – and now we have seen this financing model extended to used vehicles. It seems that customers have become quite accustomed to paying for the use of a vehicle over a defined period – usually of two to four years in duration – at a fixed monthly cost, and have no qualms about ultimate ownership as they still see the car as theirs for the duration of the contract.

The more recent development on the idea of fixed cost motoring is the subscription-based model. In this case a monthly payment secures an all-in deal covering the rental of the vehicle, plus maintenance, insurance and tax, with no fixed duration. This allows customers to opt in and out at will, as well as potentially changing their vehicle choices to suit different driving requirements: a convertible for good weather, a 4x4 for bad weather etc.

A number of vehicle manufacturers have declared that they are looking at the introduction of subscription-based models and some specialist brands, such as Volvo’s high performance EV spin-off Polestar (see last issue’s cover story), are currently only intending to provide cars on a subscription basis. Of course, the established brands will hope that customers sign up to a subscription deal that would see all of their motoring needs catered for within the same marque – but it isn’t difficult to imagine some third-party providers seeing the opportunity to use the model to offer freedom of choice across brands. This raises many questions about what the future distribution model will look like – a question addressed by this issue’s cover story.

This is all largely predicated on the understanding that future generations of drivers do not have the affection for the car and car ownership that previous generations did. It is therefore assumed that they will not want to own, or even use, cars in the way that their parents and grandparents did – especially in large cities where conventional car ownership has become increasingly impractical. High costs of ownership, exacerbated by extensive parking and use restrictions, makes the idea of flexible access more appealing for many city dwellers.

So what does all of this mean for the future of the motor industry? Well, in the long term, it is likely to be shaped very differently to how it is today. Personal mobility will still be key for individuals and for the economy, and the car, in whatever form it takes, will remain a central part of the solution. But car ownership as we have known it could become a thing of the past.

Who knows, if current predictions concerning car use and ownership prove accurate, by 2030 it may be more appropriate for our organisation to be called the Institute of the Mobility Industry?! Now there’s food for thought...

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Wendy Hennessey

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