Mobility services growing in popularity as alternatives to vehicle ownership
Deciding factors affecting the future of traditional vehicle ownership include awareness, availability, and acceptance of on-demand transportation options such as car-sharing, ride-hailing, and subscription services. The uptake of vehicle ownership alternatives is transforming the way consumers view mobility according to the 2018 Cox Automotive Evolution of Mobility Study on Alternative Ownership.
The study found that consumers' attitudes about the necessity of vehicle ownership are gradually changing. Access to mobility is necessary but owning a vehicle is not, according to 39% of respondents, which represents a 4% increase over 2015 results. For urban consumers, 57% indicate access to mobility is more important than vehicle ownership, a 13% increase since 2015. The cost of owning or leasing a vehicle also is perceived to be becoming too high by 48% of respondents. This means increasingly more consumers are prioritizing technology solutions that provide easy and more cost-effective mobility over traditional vehicle ownership.
"Private ownership still dominates the automotive landscape, but options like ride-hailing and subscription programs are increasingly popular with young urban dwellers," said Michelle Krebs, Executive Analyst for Autotrader. "The trendline for these programs could drastically alter this industry over the next five to 10 years."
Today's consumers continue to rely overwhelmingly on vehicle ownership as their primary mode of transportation and love the freedom (81%) and convenience (89%) associated with it. This, however, is not particularly true with younger cohorts, as 55% of Generation Z, 12-22-year-old respondents, and 45% of Millennial, 23-36-year-old respondents, feel transportation is important, but owning a vehicle is not. Whereas 34% of Generation X, 37-53-year-olds, and 28% of Baby Boomers, 54-72-year-olds, feel the same. Various business models such as ride-hailing and carsharing are gaining traction, as are new subscription or flexible lease options. Automakers like BMW, Mercedes-Benz, Porsche, and Volvo and mobility companies like Clutch and Flexdrive are growing an ecosystem of fleet vehicles, where commercial owners hold the asset and charge consumers for usage.
Ride-hailing is mainstream, while carsharing remains niche. Usage and awareness of ride-hailing has hit the mass market, with 88% of respondents aware of this mobility option regardless of where they live, and with more than half of Millennials (55%) using this service. Carsharing has experienced slower, pocketed growth with awareness at 54%, including a quarter of Millennial adoption. Lack of widespread adoption is due in part to carsharing being significantly less accessible than other alternative transportation methods. In urban areas where carsharing is most prominent, only 44% of consumers find it accessible vs. the 85% of consumers that find ride-hailing accessible. The carsharing space also is fragmented with many players, giving consumers many different options and leaving no clear leaders in usage. Ride-hailing is less crowded, with Uber (30%) and Lyft (18%) as the clear frontrunners in terms of usage among respondents.
The newest alternative ownership model is car subscription services, described to consumers taking the survey as a service that gives you control of a vehicle (similar to leasing) but also offers the ability to swap your vehicle weekly or monthly. Users pay a one-time membership fee and a subscription payment for their vehicle access (either weekly or monthly) that includes all expenses except gas (such as insurance, maintenance, and roadside assistance).
While car subscription services are only beginning to gain traction and are currently only available in select markets, 25% of consumers (18-64 years old) have heard of them. Comparable to carsharing, it is most appealing to young males and new-vehicle buyers, with 10% of consumers indicating they would be open to a vehicle subscription service instead of purchasing or leasing a vehicle the next time they are in the market. Access to the latest technology is the key draw to subscription services (44%); worry-free maintenance (36%), the ability to swap vehicles based on your needs (35%), and flexibility (35%) also are strong benefits.