Pundits in the automobile industry view the future replete with social and technological progressions that gradually give rise to changes in people’s mobility patterns and preferences. Some of these are already ubiquitous in urban hubs and more likely to be the norms of moving about, such as the advent of powertrains and the rise of autonomous vehicle. There is likewise the emerging trend of shared access to private transportation facilities, through taxis, limousine services, rental cars, and car sharing.
Economies of scale pave the way for the growth of shared vehicle services business as well as in the increase in the number of players. The usefulness and convenience of point-to-point transportation offered by the sharing scheme are greatly appreciated in the market particularly among non-drivers, senior citizens, low-income families, and citizens not qualified for driver’s license. The upsurge in the competition led into transcending geographical borders to locate new ventures and create niches through segmentation of services and clients.
Meanwhile, people’s preferences in owning a car are affected by the technology proven safety, convenience, and economy of autonomously driven vehicles. Such shift in options induces investment in more costly automobiles, boosted further by the onset of customized designs tailored for peculiar demands and situations.
Definitely, private ownership will continue to prevail and will continue to propel car business which is basically dealer driven and consumer-centric enterprise. However, as the public progressively find comfort in accessing on-demand mobility, they could easily abandon the idea of acquiring a vehicle. This behavioral alteration certainly should entice the auto finance business to rethink strategies.
In other words, to survive the rising changes in mobility templates, auto finance companies need to reassess their conventional ways of doing business, re-examine their industry’s value chain, from sales and origination to servicing and asset disposition. The breadth of the necessary renewal will be different across the lending trade. Huge, universal banks may have already the means to redesign or upgrade financial models and packages as well as the expertise and skilled staff. On the other hand, those that thrive on dealer-driven loans have to research and develop new business models and prepare for the future’s surge of commercial borrowers, particularly fleet owners as autonomous shared mobility becomes the prevailing mode of transportation.
Accelerated Service International has been focusing on automobile dealerships, financial institutions and the agents who serve them, for over 20 years. For more on Accelerated Service International, click here.
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