As per the industry speculations, Electric Vehicle and Private Car Leasing would be the biggest contributors in the leasing market. With the future of mobility departing from fossil fuels, it’s evident that the leasing industry is all set to experience a major transformation in coming time. Here are the factors that would shape the future of automotive leasing in 2020.
OEMs migrating towards EV leasing
There are two major factors behind automotive manufacturers focusing aggressively on electric vehicles for the leasing market because of two particular reasons. First, the rate of depreciation for EVs is higher when compared to their internal combustion engine counterparts. Hence, leasing saves customers from worrying about low resale value. Second, leasing enables the customers to switch their EV models regularly since a new electric vehicle is showcased in the automobile industry every now and then.
Wider appeal of private leasing
As the number of first car buyers increases, OEMs are adapting their business models according to the changing dynamics of vehicle ownership. Vehicle leasing has seen a wider rate of acceptance amongst young buyers due to the added advantages like easy and hassle-free usage and fixed mobility costs.
Old cars get another life
Several leasing companies like Orix, LeasePlan, Arval and Ally are putting old cars into use for leasing since it would result in potentially higher margins. Though there are concerns over the operational costs associated with the maintenance of old cars, these firms are affirmative to keep a check on costs due to advancements in predictive maintenance technologies.
One of the most significant transformations in the leasing industry is the shift in the approach of fleet leasing companies. Earlier, they used to target only the large corporates but they are now pitching to small and medium enterprises (SMEs) as well. This sector was untapped till now and this change would create a new array of possibilities.
Mobility-as-a-Service is giving stiff competition to the leasing industry. Innovative mobility models are being adopted in the leading markets due to flexible solutions and this might lure some customers away from leasing a car.
Car-subscription services becoming popular
The simple and customised framework of the car subscription model has generated quite a lot of consumer interest in recent times. Initiatives from some big OEMs such as Ford’s Canvas, Cadillac’s Book, Porsche’s Passport, Care by Volvo and Hyundai’s Ioniq Unlimited are a testimony of the potential which these big players foresee in the vehicle subscription sector. The services give the customer the freedom to swap vehicles more frequently as per the need along with the flexible charges depending on the vehicle. Along with that, it lets them enjoy the services without any long-term commitment which is not the case with leasing.
Digitisation is making a big impact on everything and the automotive industry is no exception. Leasing companies would continue leveraging digital transformation to increase profit margins and improve their customer experience at the same time. Blockchain technology is expected to be a huge catalyst in revolutionizing the vehicle leasing industry. Data analytics too would become indispensable as an average connected car generates as much as 60GB of data per hour. This becomes all the more important for the car operators particularly in the leasing industry to consolidate and analyze the data to offer better service.
From Workshop Management Software to real-time tracking of the vehicles, digitisation would continue changing the face of the auto leasing industry as more and more vehicles would become a part of the connected car ecosystem in 2020.
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