SA in slow lane as shared wheels sweep world
Trend is away from owning a car, towards having access to one
In China, millennials are increasingly opting out of car ownership in favour of hourly rentals, while in London thousands of bicycles, which can now be located and unlocked with a smartphone app, were recently introduced into the city's established bike-sharing scene.
These developments are part of a global personal-mobility revolution, in which ownership of transport solutions is shared - a trend that is already established in the US and Europe and quickly gaining traction in some emerging markets.
Although South Africa is lagging behind the trend, with just one small car-sharing service, Locomute, operating in the country, car manufacturers and vehicle-finance providers are getting into gear for a future in which local consumers will demand mobility above car ownership.
"We see a market where more and more customers are not exactly sure about owning a car. They are starting to dabble with the principle of why they should own a car and not pay for the usage instead," said Marius Burger, CEO of Toyota Financial Services in South Africa.
The company has launched Toyota Future Drive, which offers consumers a shorter contract period than the traditional hire- purchase model. Consumers make a fixed monthly payment with a guaranteed future value placed on the car, giving them options as to when the contract ends.
The creation of a platform where consumers have access to a compact Toyota Aygo during the week and a 4X4 for a weekend trip to the bush could be on the horizon, Burger said.
BMW's global strategy has also shifted focus, BMW Group South Africa spokesman Edward Makwana said.
The company has launched ReachNow in Seattle and Portland in the US and Drive Now in several European cities. Both are free-floating car-sharing services that provide for vehicles to be rented from the street and returned anywhere within a defined area in those cities.
"We are exploring a long-term view to see how we can implement the services in South Africa. Given the high crime challenges in our country, particularly car theft, we need to look at ways of mitigating these risks to ensure that the services are as seamless as in other countries," Makwana said.
WesBank spokesman Rudolf Mahoney said while there was still demand for traditional car finance, more of this now finances used cars.
With the economic crunch and about 50% of first-time vehicle finance applications being turned down by financial institutions, there is a gap in the market to assist consumers who do not qualify for traditional finance, said TransUnion Auto Information Solutions CEO Derick de Vries.
"With shared ownership you might see people use unsecured loans [to finance cars] where, instead of one person applying for R200,000, you can have four people applying for R50,000 each," he said.
Mahoney and De Vries do not see South Africans making an overnight switch from vehicle ownership even though "the consumer is coming to a realisation that their car is the most underutilised thing they have. You only use it for between 5% to 10% of your day. People are starting to realise that it's better to rent, but South African consumers are very attached to their cars," Mahoney said.
Globally, millennials have been huge drivers of the shared economy but their South African counterparts have not embraced sharing to the same degree, partly because cars are still an aspirational purchase for consumers who are the first middle-class generation in their families and want to own, not rent, said FCB Africa CEO Brett Morris.
Another reason the adoption of mobility services has been sluggish in South Africa is practical - South African cities are not densely concentrated so people drive farther, while public transport systems are not seamlessly connected.
This is a lesson South Africa's first and only car-sharing service, Locomute, learnt early on in its operation. The start-up, operating mainly in Cape Town and Johannesburg, launched two years ago and shifted its focus to corporate clients after realising a disconnected public transport network and limited infrastructure hindered take-up, said founder and CEO Tumisang Marope.
"Our vehicles need to be parked somewhere. In Europe and the States, street parking is quite accessible and regulated. Because car-sharing is recognised there cities designate parking for car sharers. In South Africa legislation is not there yet," he said.
Locomute has struck deals with shopping malls and corporate parks. It has also partnered with vehicle dealerships for consumers to make use of its services when their own vehicles are away to be serviced and is in talks with the government to embed its vehicles into the Gautrain network.
"The idea would be that when you get off the Gautrain your ticket also pays for a vehicle from the station to your destination," Marope said.
Volkswagen Group South Africa general manager of communications Matt Gennrich said local manufacturers should look to other African countries to push out mobility services in the region.
"There you've got a situation where car ownership has never been much of a factor. Just like with phones, people went straight to mobile phones but never had landlines.
"It's about mobility - does mobility mean you have to own a car or does it mean you have to have access to a car?"