Does COVID mark a shift from Vehicle Ownership? Key takeaways from World Auto Forum
The World Auto Forum recently hosted a virtual panel of esteemed experts from India to shed some light on the future of the mobility segment. Mr. Suvajit Karmakar - CEO & Director of ALD Automotive India was also a part of the panel which aimed to provide insights into the changing perception of consumers towards vehicle ownership.
The experts also tried to explore the facets of innovative models like hiring, leasing, subscription and rentals.
Anuj Guglani, the CEO of WAF and also the host on the panel, held up 3 questions for the experts:
- Would the lockdown & Covid era take customers back to car buying?
- Can innovative models of subscribe, hire & lease still keep consumers from buying?
- What can be the win-win business models with the consumer at the centre?
Here are a few key takeaways from the discussion:
Decoding the customer
In recent years, ride hailing services have changed the perception of consumers towards automobiles. People have started viewing mobility as a service (MaaS) to pay for, rather than owning cars. The biggest change due to the COVID scenario, is the shift away from public transport for safety and hygiene. As this also includes the various ride hailing services, consumers are looking for middle ground between owning a car and using car sharing services. This is where innovative models like car rentals, leasing and subscription can come into play. Whether it is leasing or subscription, the fixed payment plan offers customers financial freedom with flexibility.
Finding the right model of mobility
As there are too many choices to consider, the customer can choose the most flexible, transparent options that's available on their terms. The demands of the customers play a huge role in deciding whether cars get hired or leased. Currently the Indian leasing segment has a fleet between eighty thousand to a lakh cars. As more cars and services make themselves available, customers will start availing services that are compatible with their lifestyles.
Benefits of leasing or subscription
For a long time in India, the only way to have a car at your disposal was buying it. Car subscriptions or leases take away the financial commitments of owning a car. Subscription is like a surrogate car ownership with flexibility. This means customers can avail a car sooner than they can afford to buy one. While subscription is usually for a short duration, a car lease usually has a minimum two-year period. However, both models have a host of benefits. Primary among them is the reduction of monetary outflow, because of inherent residual value. Risks of resale value, maintenance and insurance are reduced. As customers can hold car leasing firms accountable, customers don't mind getting a used car on lease.
You can watch the complete interview here:
Suvajit Kamarkar, CEO of ALD Automotive shares his views on the emerging market:
"Currently, the penetration of car leasing or subscription in India is low. As the new normal approaches, more and more corporates are realizing the need for sanitized transport for their employees"
"As for the question of leasing vs. hiring vs. subscription, each has a different customer base. While businesses and corporates still opt for leasing, small businesses and individuals are more likely to opt for subscription, owing to convenience and flexibility. India has a large aspiring class that wants to drive new and better cars. Even used cars could be brought in for subscription. So, all of these models can co-exist with their own set of customers. We are moving to a point where the consumers have the choice, and they can map which one is the best option for them."
Summing up, car leasing and car subscription are certainly generating interest among consumers. Although conversions will take time, it's time for companies to innovate and find the right model of mobility that works for their consumer base. To know how ALD Automotive can boost mobility for you, browse our various leasing plans.