Are the days of car ownership numbered?

Like many South Africans, I love my car. It’s sleek. It’s quick. It makes me smile every time I get into it. But it may be one of the last cars I ever actually own myself, as mobility patterns undergo a huge change in the next couple of decades.

Many studies have predicted that by 2030, hardly anyone in the US and Europe will own their own car. Instead, most people will use self-driving, electric ride-shares to get around. In Dubai, they may use self-piloting drones. I’m not convinced about the timeline, but I do know this: the world of mobility is changing before our eyes.

SA’s vehicle sales volumes have been steadily declining for several years, and that’s unlikely to change. Many younger and urban consumers don’t want to own cars; they simply want to get from A to B. Others want to own cars, but they can’t for various reasons. So, how does the automotive industry create solutions that provide mobility beyond traditional car ownership?

Right now, there are about 12-million vehicles on SA’s roads. Of those, only about 2.4-million are financed and roughly 3-million  insured. TransUnion’s data suggests that less than 15% of vehicle finance applications get taken up. There are about 24-million sales leads being generated each year — but the industry sells only close to 530,000 new vehicles.

This tells us a couple of things. First, there are plenty of consumers who are interested in buying a car, but that can’t be converted through a traditional credit application. One way of addressing this is by finding ways of using alternative data to allow more people to qualify for credit to buy or lease vehicles.

But, while that may get more people into cars, it won’t solve the bigger problem: there is a vast market out there that requires mobility but cannot be accommodated. In other words, we don’t have a vehicle ownership problem. We have a mobility problem. And while financed vehicles will remain relevant for the foreseeable future, the real opportunity for the automotive industry lies in creating alternative mobility models in line with the global trend of mobility as a service.

If we look at mobility as a continuum, with pure ownership on the one side and usership on the other, everything in between those two points is mobility as a service — leasing, subscription models, e-hailing, taking a plane, carpooling, public transportation, ride sharing and many more.

In Europe and more developed economies, ride-hailing and ride sharing have practically become the norm. They’re a rapidly emerging trend in SA, albeit largely in the major urban centres for now.

There are several factors that are driving this “as a service” mobility model. One is the boom in subscription models for all types of goods and services. The subscription model offers simplicity and adaptability and is appealing to many customer segments.

Older drivers want to avoid the annoyances of car ownership, such as maintenance and insurance, while younger markets want to avoid significant outlays and long-term financial commitments. A growing number of car manufacturers are already offering subscription models for their vehicles.

A second driver of mobility as a service is the increasing urbanisation of our population. It’s estimated that 55% of the world’s population lives in cities. They don’t need a car. They just need access to transport — and that could include everything from public transport, bicycles and scooters to ride-sharing and carpooling.

In SA, we have all the elements we need for alternative ownership models like subscription. Think affordable, long-term, flexible car hire. We have the demand: the huge market of people who want to be mobile. We have the supply: a huge stock of vehicles standing idle at dealerships — and vehicles that don’t move, don’t bring in money.

That’s why the future of mobility, and the automobile itself, isn’t electric vehicles. That’s just what drives the vehicle. The future lies in using technology to help the industry meet its stakeholders where they are.

It lies in providing the type of instant gratification-driven experiences that modern consumers are looking for. It’s about helping the industry create personalised experiences that meet individual customer needs. Ultimately, the future lies in offering tech-savvy consumers the transparency and control they want in any car ownership process.

Personally, I can’t see myself not owning some sort of vehicle in my lifetime. But, like the entire automotive industry, it’s important to be open to change. Our relevance depends on it.