“Whatever I pay for the car, it’s worth it”

For many years, a move from ownership to use has been flagged as a major threat to the traditional business model that is focused on every individual having access to their own car.  Progress has been slower than the various commentators have suggested and many schemes have been launched and failed over the years.  Others soldier on, but are still loss-making, whilst a few seem to have found a niche that works and appear to have a brighter future.  Some manufacturers have taken a strong position, notably Toyota who have declared their shift towards becoming a mobility company as a ‘once-in-a-century period of profound transformation’.

The arguments in favour of user-ship rather than ownership are varied, and some are fundamentally flawed, but the topic has come up in a few conversations with different parties in the last week, and there is clearly still a strong momentum to create new offers and expand existing offers into new markets.  The arguments in favour are generally environmentally driven, and some are clearly valid.  Cars offered on mobility and subscription schemes are generally new and are well maintained.  Some schemes are wholly or heavily biased towards zero emissions vehicles.  Mobility cars sit in between private and public transport, and this blurring of the boundaries perhaps encourages individuals to make more conscious decisions about the most effective transport mode for each journey rather than automatically reaching for their own car keys.  More intensive use of each car would also result in fewer cars being required to meet our combined transportation needs, which is positive in terms of utilisation of the earth’s natural resources.

Some arguments are flawed however.  As we are often reminded, a car purchase is often the second largest spend after your home, yet we only use it around 4% of the time, so it is an inefficient allocation of our capital.  Unfortunately, many of us want to use our cars for the same 4% of the time – for commuting or school runs – so you cannot just merge all those 4% slots together and say that we only need one car for 25 drivers.  Some proponents claim benefits in reducing congestion, but this is highly questionable as the cars are still used by individuals, who presumably use them in much the same way as they would use a personal car.

The main challenge however is that the majority of drivers still want to have a personal car that they can call their own – even if it is leased.  In our consumer research amongst the adult population as a whole and new car buyers specifically, over 90% still believe that they will have sole use of an individual car in ten years’ time.  Over 60% of new car buyers did not consider any alternative form of transport such as public transport, car-sharing or a subscription scheme.  A common theme is convenience, and buyers are willing to pay for that convenience.  In focus groups the comments ranged from the fairly reasonable “I could live without a car, but it would negatively impact my quality of life” to the more adamant “I will carry on owning a car until I drop dead – a car is essential.”

A complication is that whilst most acknowledge that owning and running your own car is expensive, that perception is based on a cost which under-estimates the true cost.  Our focus group participants admitted that they did not actually add up the costs, so their focus is on the obvious elements such as a monthly lease payment, insurance and fuel.  They tend to forget occasional costs, and if they do own the car, they ignore the depreciation and cost of capital.  When they look at subscription offers that obviously reflect the true operating cost, they perceive these as expensive, even when the unwanted frills that some such schemes include are stripped out.  If they are looking at mobility schemes that mean they only pay when they use the car, their cost expectations are much lower – “if I only use the car 4% of the time, I should only be paying 4% of the cost”.  This is despite the fact that their service level expectations are still very high – they still want assured access to a car at peak times, just the same as everyone else.

Despite these challenges, we may be approaching a window of opportunity for the further development of user-ship.  As we transition to electric cars in a period when manufacturers have to meet their emissions target mix to avoid massive fines, but customers are nervous about the technology, there are deals to be made to match needy manufacturers with hesitant consumers.  One survey respondent told us that “until we absolutely know what’s going ahead, I wouldn’t buy an electric car”, but that same person might be willing to subscribe to one, or take it on a flexible lease.  Whilst not a marriage made in heaven, it could provide an impetus to both BEVs and usage rather than ownership.