Massive, different, urgent: how six forces triggered the mobility revolution
The mobility revolution and the rise of flexible, easy-to-use transport solutions that encourage the usage rather than ownership of vehicles has been simmering for several years. Now, it has arrived.
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Corporate Value Associates
Corporate Value Associates is a Global Strategy Boutique supporting market leaders in creating value through its customer-centric approach.
The mobility revolution and the rise of flexible, easy-to-use transport solutions based on usage rather than ownership of vehicles has been simmering for several years. Now, it has arrived.
The rapid convergence of six powerful forces has kicked-started the much-anticipated mobility revolution. And the shift from widespread vehicle ownership to a myriad of vehicle usage services will create huge opportunities for banks, insurers, leasing companies and other financial services firms. It will also open the way for far-sighted automotive suppliers, dealers and rental firms to extend their businesses into the fast-expanding mobility services ecosystem.
Shared mobility services alone could generate up to a US$1 trillion in annual consumer spending by 2030 – up from around US$140 billion in 2019. In Europe, “usership” contracts such as subscriptions and rentals now account for 38% of new vehicle financing. By 2030 they are likely to top 60%.
Financial services firms currently serving the vehicle industry need to quickly adapt to the changing demands of the mobility revolution or risk being overtaken by faster, more agile competitors.
The mobility revolution is “massive, different and urgent,” exclaimed Markus Collet, Partner at international strategy consultancy Corporate Value Associates (CVA). Accelerating the mobility revolution are a group of independent forces that when combined kick into over-drive.
They are:
- Fast-growing sales of electric vehicles
- Increasing consumer acceptance of subscription services
- Emphasis among vendors / operators on extracting the full value of assets over their lifecycle
- Recent entry into the vehicle market of several innovative and highly competitive suppliers, particularly from China
- Growing familiarity among consumers with new modes of mobility
- Growth of digital transactions, and imperative for OEMs to further push this channel
Amelia Bradley, Associate Partner (Automobility Platform) at CVA, remarked that the mobility revolution has been on the horizon for several years. Now, its arrived. And the effects of this revolution will be experienced throughout the automotive industry.
Vehicle providers may need to manage their assets over multiple lifecycles
The shift from vehicle ownership to usership will force companies across the industry to focus on delivering functionality and offering solutions that are flexible and tailored to customers’ individual needs, said Bradley. Vehicle providers may need to manage their assets over multiple lifecycles, she added.
Bradley and Collet were among several specialists who addressed a recent online event about the rise of mobility services that was hosted by CVA and the Qorus Mobility Community. A non-profit organization that promotes the interests of the financial services industry, Qorus established its Mobility Community in May. Soon afterwards it sealed a partnership with CVA to extend its reach and promote the interests of all participants in the mobility services sector.
Qorus provides its members with early insights into developments in their industry sectors by hosting conferences, promoting innovation and encouraging networking and collaboration. During the recent online event, specialists from across the mobility services ecosystem highlighted key developments and trends that were shaping the sector.
Ronnie Seidel, Global Head of Commerce (Mobility) at BNP Paribas, for example, revealed his organization’s projections for the take-up of vehicle subscription services. “Subscription could represent 20% of retail financing by around 2025. And it could account for 15% of new car sales by 2030. This amounts to €22 billion of new car finance by 2030. The figures are huge. That’s why everybody is interested in subscription,” he said. BNP Paribas, which currently finances more than six million vehicles, has developed a range of subscription services that it’s testing across different markets.
The value of a car lasts much longer with subscription services
Mathias Albert, Founder of subscription service pioneer ViveLaCar, added that such services are especially appealing to automotive dealers because they can maximise the value of their vehicles over the assets’ lifecycle. “The value of a car, especially electric vehicles, is boosted by subscription services. Dealers can often make more money from a used car if they use it for a subscription service instead of directly selling it,” said Albert.
Stephan Ruby, Chief Sales Officer (automotive) at Allianz Partners, pointed out that automotive suppliers are changing their business models as the market shifts towards new services such as vehicle renting and sharing. Financial services companies that serve the automotive industry must also change their offerings, he said.
Ruby identified seven features of the emerging mobility services market that insurers must master. They are:
- Embedded insurance: Insurance will become a tool embedded within the mobility journey.
- Peace of mind: Mobility providers and their customers must have complete confidence in their insurer and the products and services it offers.
- Fleet insurance: As the individual ownership of vehicles declines, fleet insurance will become increasingly important.
- Global partnerships: International alliances with major participants in the mobility services industry will be vital for insurers.
- Strong brands: Powerful brands help build trust among providers and users of mobility services.
- Dedicated teams: Focused teams that have a deep understanding of mobility services will be essential for insurers eager to gain a significant share of this market.
- First-mover advantage: The mobility services market is complex and fast-changing. Insurers that have yet to address this sector may struggle to gain a foothold.
On September 27, the Mobility Community will host an online event on “Revolutionizing the Auto Industry: Exploring the Transformative Effects of Distribution Changes on Financing, Insurance and Leasing.” You can register for free on the dedicated event website.
For more information about this event and other activities organised by the Qorus Mobility Community Manager Mirka Tokarova (mirka@qorusglobal.com).
Mobility community
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