Vehicle usership over ownership
As we barrel blindly towards an expensive electrified automotive future, Iain Robertson has noted a softening in the once stoical, British opposition to leasing and that vehicle usership is finally overhauling ownership.
The shift is so evident that the once coveted ideology about the ‘Englishman’s’ castle, complete with castellated walls and mile-high hedgerows may be under threat. According to recent research carried out by automotive specialist JATO Dynamics, in just the past decade the ‘rule’ of ownership has slumped from well over 53% in the company vehicle scene to less than 40%, a factor reinforced by the private vehicle sector being dominated by a blend of online trading and a proliferation of lease/rental programmes, by which vehicular ownership is unquestionably the finance firm’s and not the driver’s.
Unsurprisingly, increasing list prices of both new petrol cars (now that diesel is effectively shoveled from the frame) and the most recent battery-electric types…so much for ‘closing the gaps’…are forcing motorcars (let alone light vans and other commercials) further out of reach, despite their relative ease of access since the Thatcher era. As a result, the finance houses have been enjoying a bumper period of near hyperactivity, not least with the motorhome sector dealing with runaway demand, as is the caravan scene. To those early EV adopters, having to deal with a 30% to 45% upwards hike in retail prices over conventional wheels, leasing and non-ownership rental programmes are bound to take precedence.
My motoring past is littered with lease cars since the mid-1980s (a Toyota Corolla GT acquired through a broker, ranging to my current Suzuki Vitara), although I still owned outright several of the Skodas used personally over the past 36 years. The precept of non-ownership became somewhat strengthened within me, after attending the launch exercise of the first BMW i3 hybrid, where the German carmaker explained explicitly the enhanced value of usership over ownership, where maintenance and most other operational costs (apart from fuel) could result in a single monthly payment solution that simply made more sense. I have leased since, although, intriguingly, my next car, which is likely to be a Suzuki Swace (effectively a British-built Toyota Corolla estate car badged as a Suzuki) that features hybrid technology and an automated transmission, may well be adopted on an ownership basis, as it will probably be the last new car that I shall ever acquire…and I do not want to own/operate a BEV!
The progression of leasing is such that an estimated 5m vehicles were acquired in that manner last year, with around 1.9m being individual, or personal contracts. This serves to underscore consumers’ evolving priorities from the previous one of ownership to usage, a factor being exploited slowly by the motor industry and its promotional campaigns. That they can gain from the aforementioned benefits, while being provided with greater flexibility, especially in the area of obtaining the latest technology, is appreciated broadly.
Consumers have enhanced expectations, an aspect recognised by Salesforce, which highlighted that 75% of consumers’ site search queries are new each month. In turn, the demand for leasing subscriptions has also increased, showing that consumers do not want to commit to a single vehicle for several years. Needless to say, the struggling motor industry, beset by electronic supply issues, is going to be forced into learning some new underwriting tricks, in order to deal with an anticipated three-quarters of all consumers seeking a seamless end-to-end acquisition process. The change is gonna come much sooner than planned for!