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  • Christian Adelsberger

The ownership to usership transition - Myth or reality?

Updated: May 26

Exploring a major transition trend in light of new consumer behaviour


In 2019, the world’s largest furniture retailer - IKEA, announced plans to trial a new furniture rent scheme, where customers can lease their kitchen or office furniture. In the film and music industries, the status quo seems to have completely shifted in recent years, following customer’s needs and behaviour. Instant gratification is sought after, customers demand greater flexibility and they expect the business models of more and more industries to adapt to their requirements. These demands are a direct result of the rapid advancements in technology, which led to a constant evolution in terms of our relationship with products and an increased efficiency when it comes to how we - basically - live our lives. It’s clear that more and more people are choosing to opt out of accumulating stuff, and instead are opting for greater levels of convenience.


If you add environmental friendliness, emissions regulations becoming increasingly strict and a touch of a global pandemic to all of that, it’s not surprising to see why the automotive industry is closely mirroring this trend as part of its natural evolution. In light of these circumstances, car companies are pushed to adapt and rethink how their products are sold, used and owned. And there are major movements in the market to back it up. Toyota made the major transition from being a car manufacturer to becoming a mobility company, while Herbert Diess, Chairman of the Management Board of Volkswagen Group, made the following bold statement: “Ownership is not necessarily what you want. You want a car when you need a car.”


While the idea of transitioning from car ownership to car usership is definitely not a novel one, COVID-19 together with a global focus on sustainability, seemed to have prompted the shift towards car usership to continue at an increased rate.


Mobility options galore


Globally, new models of facilitating car use are proliferating alongside traditional ownership and rental options. The traditional car market structure has been expanded as consumers demand greater access and more flexibility in the way they drive. The simple action of getting from A to B is nowadays spoiled for options, and the services choice list keeps expanding. According to a Guidehouse Insights report, urban mobility revenue will rise from $11.1 billion in 2018 to $39.8 billion in 2027.


The mobility as a service (MaaS) market gathers options such as ride-hailing, ridesharing, carsharing, bikesharing, scooter-sharing, making it a strongly competitive field. Not to mention the different business models each of these services has. This can be a bit overwhelming, as many of these models still don’t provide a complete service. With making trip planning easier for users in mind, multiple services can be brought under the same bigger multimodal umbrella, which makes it a win for both mobility providers and cities. Car sharing has seen increased levels of popularity over recent years thanks to a growing demand among millennials. And it’s unsurprising, since it fits very well with users’ needs of convenience and flexibility.


We know that privately owned cars spend 95% of their time parked somewhere. Therefore, it’s refreshing to see that, particularly for residents in cities, the economics of directly owning a car seem to be changing, as alternatives such as ride-hailing and carsharing services are becoming more transparent and available, and as low-emissions zones are introduced.We see ourselves as a holistic company. Externally, this means that we want to cover all situations in which a vehicle is needed. Internally, it translates into us wanting to take care of all processes ourselves as much as possible. And these are our key points that help ensure profitability: flexibility, a holistic view and a use-case driven approach.



It’s already happening


A recent study by Ridecell reveals a visibly increased preference among Americans for carsharing and car subscription services. Of all respondents in the survey, 63% now drive less following the pandemic, highlighting a broader trend that car ownership is less of a priority. Fifty-eight percent of individuals expressed a preference for short-term vehicle usage options, with 28% saying they would use the service weekly, 21% monthly, and 15% indicating they would use it every day. For those individuals already using shared mobility, including ridesharing, carsharing, and micromobility, 75% are interested in short term vehicle service, with 64% saying they would use it weekly or monthly. Perhaps more surprising, more than half (54%) of car owners and lessees also wanted the option for short term vehicle use, with 45% saying they would use this option weekly.


The New York Times once stated that “automakers have become increasingly concerned about those technologies, and their potential to help people travel easily and cheaply without owning a car — or even without knowing how to drive.” This statement acted as a response to a most interesting week in the automotive market, back in 2016, when major car makers such as GM, Volskwagen and BMW started investing in ride-hailing and carsharing services. This was just the beginning of a trend that is still very much alive today, perhaps now even more structured than before, with names like Toyota going from being a car manufacturer to becoming a mobility company.


A need for tailor-made solutions


There’s absolutely no doubt that the pandemic had (and still has) a very strong impact on consumer’s behavior. But not all of this impact has been a bad one, as it also pushed some healthy agendas forward. This includes an increase in the acceptance and the adoption of CAV technologies, autonomous mobility, and mobility-as-a-service as solutions for a sustainable future. While so far people paid less attention to it, COVID-19 painted a clearer picture when it comes to its importance.


Octavian Chelu, principal consultant fleet and leasing at Frost & Sullivan focuses on the future of mobility impacted by a global pandemic and states that “In terms of behavior, we have since over the last 2 years is seen people looking for more flexible solutions such as vehicle leasing. Ride-sharing and carsharing have appeared in the last few years. The company car segment is shifting to using ride-sharing, for example. This has accelerated some trends in the market. New mobility was hit by the Covid-19 crisis – the reluctance to use ride and carsharing: is there a risk of being infected? People are looking into receiving their own mobility solution, tailored to their own individual use case: e.g. vehicle subscription, allowing you to use a vehicle for as little as a month, or more, as you don’t need to sign a contract and you can drop out of the contract at any point in time.”


Even so, there’s still a long way to go to secure consumer’s acceptance and a lot of effort is still to be made. That’s because, while the technology is continually being developed and new solutions emerge, success resides in pushing the market to adopt the new. We’re witnessing it with EVs, where the uptake has increased, but they’re still far away from achieving mass adoption.


A new era in mobility?


We strongly believe so, or we’re not in the right business. However, overall it’s difficult to tell. As we’ve seen, there are a lot of factors involved, but things are, in fact, moving forward. Only time will tell how well this model will work, but we’re going to be here working on it. We must not overlook the emotional factor here since for some drivers (quite a lot still) the freedom and convenience of having their own car is one that they won’t want to give up. MaaS itself has begun demonstrating that money can be made from our own vehicles, so owning a car can now have other, profitable usages. And with a new generation of consumers developing a behavior which is more and more towards a shared future of mobility, we can see how the usership movement can become the norm. You will always be able to buy a car, but what’s clearly changed is what you can do with the car when you don’t use it.


One cannot ignore the natural evolution in consumer’s behaviour, well prompted by the global circumstances and needs for protecting the environment and sustainability. All in all, considering the change in the market in the last 10 years alone, the next 10 years are bound to be just as exciting if not more.

Ubiq enables operators to effectively position fleets to serve strategic goals. For more information, contact sales@ubiq.ai