WHY YOU SHOULD RETHINK YOUR DREAM CAR

Buying a car has long been esteemed as a core milestone for people of all ages. Many of us fondly remember buying our first car, and we all celebrate the buying of a new one, turning to social media and friends to showcase our shiny new purchase. However, trends of recent and coming years are pointing towards a way of living in which celebrations of these purchases will happen less and less.

Despite being a central part of life for many in the past, car ownership is already decreasing significantly with urbanisation rates continually rising and car-sharing services becoming readily available. Add to this the rise of driverless vehicles and the vision for the future of driving diverges even further from the cars we are familiar with.

My colleague and fellow trend forecaster Steve Sammartino reflects on the significance of this new way of operating. “We are quickly moving from a world of access instead of ownership. Renting is cheaper than owning and so people are choosing to access things instead of owning them.”[1] At the core of these trends of access over ownership is an assumption that there is little benefit or sense in owning an asset which will depreciate, go out of fashion or require money to maintain, when you could simply pay to access that asset when and how you want it. For many urban individuals, ownership is simply not the efficient option anymore.

From a disruption standpoint, the possibility of driverless car-sharing services is keeping leaders in the auto industry awake at night — or at least it should be. Barclays Capital analyst Brian Johnson has said vehicle sales will likely decline by 40% by 2040.[2]

One business analyst recently predicted that owning a car in 30 years’ time will be like owning a horse today – something you do if it is a personal interest or hobby but not as your primary means of transportation. If indeed our future communities are serviced by a range of convenient driverless ride-sharing services, owning a car would certainly look increasingly unnecessary – much less financially attractive. According to recent research, cars today are driven just 4% of the year, which is an astonishing waste considering that the average cost of car ownership is nearly $9,000 per year. [3]

Some of the most thorough research, examining how the self-driving age will unfold has been conducted by Tony Seba and James Arbib of the think tank RethinkX. According to Seba and Arbib, 90% of passenger miles by the late 2020s will be travelled in autonomous vehicles and that many of those vehicles will not be owned by the ‘driver’. Instead, this 90% of travel will be done in driverless Uber-style vehicles, which will make up 60% of the cars on the road.[4] (Similar forecasts from the Boston Consulting Group predict that Seba and Arbib’s predictions are likely to be spot on.)[5]

 As Seba put it, "People simply won't own cars. The Ubers and GMs of the world will own the cars, and they'll be in use constantly, which will drive down the cost of each ride to a point where it will be economically irresistible to consumers."[6]

 The early stages of this move to mobility-as-a-service is evidenced by an initiative launched in February 2020 called Nissan Switch. Much like programs offered by rivals including Audi and Volvo, Nissan Switch allows drivers to pay a fixed fee per month (ranging from $699-$899) for access to a car. Significantly, Nissan’s program allows drivers to change vehicles on a daily basis based on their travel needs.

 In a similar move, Toyota announced plans in January 2020 to launch their car subscription service, Kinto, in select markets around the world. Priced at between $400-$900 per month, the Toyota initiative represents a seismic shift in philosophy for the Japanese automotive giant. If the automotive sector is indeed facing a once-in-a-century transformation, as Toyota’s President Akio Toyoda believes, moving away from asset ownership may well be a defining characteristic of the changes ahead.[7]

 Importantly, it’s not just the major car makers forging a path for subscription services. The growing popularity of peer-to-peer car sharing services like Turo and Getaround offers a clear indication of how pervasive this trend will be. In the case of Getaround, 2020 saw business volumes double between January and September alone. It’s worth noting that while some mobility-as-a-service operators are going from strength to strength, others are still searching for a viable business model. The shuttering of GM’s car-sharing service Maven and BMW’s Car2Go initiative shows that there is still a way to go before the traditional car ownership model loses its dominance as the default for consumers.[8]

 September 2020 also saw Australian power utility provider AGL surprise industry commentators with the announcement that they were launching a vehicle subscription service for electric cars. This new initiative was one of the first of its kind globally and is aimed at removing the barriers to entry for people embracing electric vehicles. As part of the service, subscribers pay a monthly fee of roughly $1,200 to get permanent access to a vehicle of their choice. This monthly fee includes vehicle registration, insurance and maintenance as well as covering the cost of installing a charging station in the users’ home.[9]   

 Researchers at PricewaterhouseCoopers put it best when they declared "Access is the new ownership."[10] While some celebrate this as the best expression of neoliberalism – encouraging free flow of goods and services in the market without government regulation[11] – we must acknowledge the fact that asset ownership underpins the viability of countless industries and professions. Broadly speaking, this will have significant ramifications for our society and economy in the years to come. While we have long talked about our economy being increasingly service-based, the end of ownership will see this increase exponentially.

So while car ownership has long stood as a marker of adulthood and moment of celebration, the future will see it evolve into something different altogether. Beyond the economic ramifications, the social effects of access over ownership will be interesting to observe as a generation emerges filled with young people that may never see the purchase of their first car.

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Michael McQueen is a trends forecaster, business strategist and award-winning conference speaker.

He features regularly as a commentator on TV and radio and is a bestselling author of 9 books. His most recent book The New Now examines the 10 trends that will dominate a post-COVID world and how to prepare for them now. 

To see Michael speaking live, click here.

For more information on Michael's keynote speaking topics, visit www.MichaelMcQueen.net.

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[1] Sammartino, S. 2017, The Lessons School Forgot, Wiley, Milton, pp. 50, 51.

[2] Colias, M. 2017, ‘GM Tries A Subscription Plan For Cadillacs’, The Wall Street Journal, 19 March.

[3] Ibid.

[4] Della Cavea, M. 2017, ‘Self-Driving Electric Vehicles to Make Car Ownership Vanish’, The Australian Financial Review, 9 May.

[5] Hirschauge, O. 2015, ‘Are Driverless Cars Safer Cars?’, The Wall Street Journal, 14 August.

[6] Della Cavea, M. 2017, ‘Self-Driving Electric Vehicles to Make Car Ownership Vanish’, The Australian Financial Review, 9 May.

[7] Korosec, K. 2019, ‘Toyota’s new car subscription company Kinto is gamifying driving behavior’, TechCrunch, 5 February.

[8] Somerville, H. 2021, ‘Turo CEO Says Car-Renting App Plans to Go Public in 2021’, The Wall Street Journal, 1 January.

[9] Readfearn, G. 2020, ‘AGL bets on electric vehicles subscription service to boost Australia's uptake’, The Guardian, 9 September.

[10] Claburn, T. 2015, ‘The Sharing Economy: Access Is The New Ownership’, Information Week, 15 April.

[11] Ross, A. 2016, Industries of the Future, Simon & Schuster, New York, p. 92.