Industry trends

Is car ownership dead?

Tristan Young, Editorial Director, Auto Retail Network | 03 Mar 2020

Is car ownership dead?

Tristan Young, Editorial Director, Auto Retail Network | 03 Mar 2020

In this article:

Is car ownership dead, three industry experts discuss how they think things could change in the coming years – if at all.

Is there still room for the traditional car retailer? If you believe the futurologists, usership – including ride-hailing and car-sharing services which enable users to order vehicles as and when they’re needed, rather than owning them – is the next stage in the evolution of how people get around.

Instead of hopping in our cars, we’ll all be able to plan seamless journeys using a range of different modes of transport, from cars to trains, taxis and beyond – all through apps on our phones. But how likely is this vision of a multi-modal transport future? To find out, MotorPro asked three industry experts for their predictions.

Shwetha Surender
Industry Principle for New Mobility, Frost & Sullivan

So far, the automotive landscape has been slow to change in this area because sales haven’t been affected yet. And they’re not likely to be any time soon, either. However, the big shift has already started. For example, if you look at London and the modes of transport that are available, you can see a change.

In 2000, private car use accounted for 47% of journeys, but today it’s 33%. That’s a significant drop. This has come about because mass transport and alternative modes of transport have improved. If this is repeated in other cities, it will eventually hit car sales.

This change could be good for the economy too, as it will reduce congestion. The time saved helps GDP, and the improvement in air quality has an indirect healthcare benefit. The impact will be largely urban centric and will take place over the next five to ten years, particularly as mobility as a service develops.

For example, what we have seen with car-sharing clubs is that most members give up their second car or postpone buying their first car, but they don’t drop ownership entirely. There are times, such as when they have kids, when they’ll still need a car. Mobility services will gradually start to hit car sales, but the main impact will come when services such as car sharing spread into suburban areas over the next 15 years.

Robert Forrester
CEO, Vertu Motors

I read all these reports from consultancies that say people won’t own cars in the future because they’ll just use carsharing schemes or similar, but if you look at what’s actually happening, there’s no evidence that car ownership is really going down.

The current car-subscription schemes are expensive. Until they become much cheaper, they won’t take off. And if you have young kids and need car seats, they don’t work for you.

Equally, if you look at the upper end of the spectrum, is the premium car owner going to want to share his or her car? No, they’re going to want their own space. The closest Vertu gets to these ideas is the Volkswagen Financial Services’ rental option. We do that because it’s good for us and the customer. It surprises me that there’s no push-back on this. No one is challenging the councillors and elected officials who say that cars are evil. Cars aren’t evil, they’re one of the greatest liberators of the population because they give mobility to the masses.

Louise Wallis
Head of Business Management, National Franchised Dealer Association

I think car usership will become part of the mix to a degree, but it will take time. Views regarding the importance of owning an item do change over time – just look at the rise of monthly payments for phones. Most cars bought privately are now on some sort of finance agreement with monthly payments, and that model of ownership will still be the main way of running a car for some time to come. However, if sales do drop, the value chain will have to adapt.

Some retailers are already looking at leveraging the stock they hold in other ways. For instance, they could use unsold stock for a carsharing or flexible-ownership service. The subscription model could work for that, but no one has got the business model down yet.

Manufacturers don’t really understand the second and third lives of cars yet, but retailers do. The value chain could become more focused on used cars and servicing. There will always be a need for servicing and maintenance; that’s not going away. They could also offer specialist packages that look after those cars being sold into the new subscription services

This is an edited extract from IMI's new MotorPro magazine, received free as part of IMI membership. Time to find out more about becoming a member of the most influential community in UK automotive…?

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