According to a recent McKinsey report, the shift in the auto industry is being driven by a decline in the number of passenger car owners and a growing interest in shared mobility and leasing that meet the need for flexible transportation options.
For decades, car ownership in India has been viewed as a social status. However, now it is changing. It seems that compared to Baby Boomers, Millennials are changing several lifestyle choices that include owning a car. They drive a whole new customer journey and change the symbolic meaning of car ownership. Like their parents, for the current generation, buying a car is not necessarily synonymous with success or status. Thus, they seem to defy conventional expectations.
This is because today’s users think differently when it comes to owning a car. For example, where to park the car, how much will a new car cost? Additionally, car owners will need to purchase auto insurance and calculate repair costs if the car breaks down. No matter what car you buy, it will take a lot of money and time to maintain it in the long run. Thus, the current generation is considering alternative solutions to avoid all these hassles.
Even millennials who prefer to make the most of the present and care less about the need to buy or own a car in terms of long-term viability, according to Deloitte’s Global Automotive Consumer Study 2019. Compared to older generations, it is interesting how this generation is more aware of their approach and choices before making a purchasing decision.
It’s also important to note that most people take out a loan to buy a car. Now millennials have grown up watching their previous generation struggle to pay off their loans. They reflect on the worries that owning a car can cause. So buying a car is not financially a perfect mobility solution for them. This is because auto loans require heavy investment. You will have to pay a deposit, which sometimes represents a significant amount of the total cost of the brand new car. Also, even if the buyers buy the car, the car is mortgaged to the lender until they pay off the entire loan.
For this generation, affordable personal mobility solutions that offer flexibility, security and convenience are their go-to choice. In addition, technology also plays an important role.
In practice, a car subscription or leasing model is a new way of owning a car, in which customers rent or hire cars from a rental mobility company. The fundamental reason why this model is gaining ground is that it has many 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 time. Plus, it gives commuters the option to upgrade or downgrade the car as per their needs and convenience. Another plus is that they won’t have to worry about whether someone will buy the used car. What to watch out for when choosing a car subscription is paying the monthly rental fees and maintaining a good credit rating.
In addition, it is also a practical option when individuals have a transferable job, as it eliminates the need to transport their car from one city to another when on the move. To put it in perspective, of course, a rapid change is taking place among millennials in terms of the preference and practice of buying or owning a car.
On the other hand, it is fair to mention that car subscription or leasing is gradually gaining popularity, especially in the new normal era. Today, millennials are prioritizing a secure and affordable personal mobility solution. And, of course, they want a mobility solution that is not only economical, but that offers flexibility and privacy.
Moreover, given the growing trend associated with the fact that the global car rental and leasing market is expected to reach a valuation of $ 492.6 billion by 2025, it is therefore safe to say that the rental models of cars will transform existing modes of mobility. in the years to come.
Warning:The author is Managing Director and CEO of Avis India. All opinions are personal.
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