The shift from car ownership to transport systems based around mobility services will reshape the new car market and the auto finance industry, according to an industry expert.
Jens Diehlmann, global automotive finance leader at Ernst & Young, says that advances in technology are opening up the possibility for a completely different approach to car use, White Clarke Group reports. Global access to the internet and the rise of digitisation, with 80 billion connected devices by 2020, will enable the efficient roll-out of new concepts such as car sharing and ride sharing, he explained.
At the same time, increasing urbanisation — with space at a premium — is expected to push up vehicle ownership costs. This will boost the popularity of mobility services.
In 2015, car sharing services had an estimated 6.5 million members worldwide but that number is set to reach 26.2 million in 2020, while demand for ride sharing services will double.
Diehlmann predicts that by 2030, around 5.2 trillion miles or 26% of total travelled miles globally will be shared, creating a $2.6tn market.
“What we all agree is that vehicle ownership will go down. Vehicle usage will go up. The main drivers will be customers’ behaviour on the internet, digitisation and urbanisation,” Diehlmann said.
In this new landscape, the challenge for the auto finance industry is to remain relevant and profitable.
Explaining that the industry needs to adapt to compete, Diehlmann made five predictions about the future for auto finance:
- It will be more about selling miles rather than selling vehicles.
- Consolidation will result in only a handful of ‘one-stop-shop’ mobility platforms.
- Data is the future currency, and users will be the owners.
- Mobility data will be traded.
- Cross-selling of other services during the journey will be a key growth area.
If the industry is slow to respond it risks missing the opportunity, and relying instead on traditional and dwindling sources of income, White Clarke Group concluded.