According to a recent report by McKinsey, the shift in the automobile industry is driven by a decline in private car ownership and growing interest in shared mobility and rentals which meet the need for flexible transportation options.
For decades, car ownership in India has been considered a social status. However, it is now changing. It looks like in comparison to Baby Boomers, millennials are altering several life choices that include car ownership. They are driving a whole new customer journey, and are changing the symbolic meaning of owning a car. Like their parents, for the current generation buying a car doesn’t necessarily indicate success or status. So, they appear to be defying conventional expectations.
It is because users today are thinking differently when it comes to car ownership. For instance, where to park the car, how much will a brand new car cost? In addition, car owners will have to get car insurance as well as figure out repair charges if the car breaks down. No matter which car one buys, a great amount of money and time will go into maintaining it in the long run. Thus, the present generation is considering alternative solutions to avoid all these hassles.
Even millennials who prefer to make the most of the present and worry less about the are questioning the need for purchasing or owning a car in terms of its long-term viability, as per Deloitte’s 2019 Global Automotive Consumer Study. Compared to older generations, it is interesting to know how this generation is more conscious about their approach and choices before making a purchasing decision.
It is also important to note that most people take a loan to buy a car. Now, millennials have grown up seeing their previous generation struggle to repay loans. They think about the concerns that owning a car can cause arouse. Thus, buying a car isn’t financially a perfect mobility solution for them. It is because car loans require heavy investment. One will have to pay a down payment, which, sometimes is a significant amount of the total cost of the brand new car. Moreover, even though buyers purchase the car, it is hypothecated to the lender until they repay the entire loan.
For this generation, affordable personal mobility solutions that offer flexibility, safety, and convenience are their go-to pick. Plus, technology is playing an important role as well.
In practice, a car subscription or leasing model is a new way of car ownership, wherein customers rent or lease cars from a rental mobility company. The fundamental reason why this model is gaining traction is that it comes with an array of advantages.
Customers don’t have to worry about heavy maintenance costs, EMIs, taxes, and a host of other expenses. Besides affordability, it’s a suitable mobility solution for those who like to experiment and drive a new set of wheels rather than sticking with one car for a long duration. Moreover, it provides commuters the flexibility to upgrade or downgrade the car as per their requirements and convenience. Another advantage is that they will not have to be worried about whether anyone will buy the used car. What one needs to take care of when opting for a car subscription, is paying the monthly rental charges and maintaining a healthy credit score.
Furthermore, it is also a convenient option when individuals have a transferable job, as it eliminates the need to transport their car from one city to another as they move. To put things in perspective, certainly, a rapid shift is taking place among millennials in terms of their preference, and the practice of purchasing or owning a car.
On the other hand, it is fair to mention that car subscription or leasing is gradually gaining popularity, more so, in the new normal era. Millennials today are prioritizing a personal mobility solution that is both safe and affordable. And, of course, they are keen on owning a mobility solution that is not just economical but provides flexibility as well as privacy.
Moreover, witnessing the growing trend coupled with the fact that the global automobile rental and leasing market is expected to reach a valuation of $492.6 billion by 2025, it is, therefore, safe to say that car rental models will be transforming the existing ways of mobility in the years to come.
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