I love my car. It’s slim. It’s fast. It makes me smile every time I get into it. But it might be one of the last cars I want, as transportation patterns are undergoing major changes.
Many studies have predicted that by 2030, almost no one in the United States and Europe will have their own car. However, most people will use electric ride sharing to drive themselves. In Dubai, they may use autonomous drones. I’m not sure about the timeline, but I do know this: the world of mobility is changing before our eyes.
The volume of vehicle sales in South Africa has been declining for many years, and it is unlikely to change. Many young and urban people do not want to own a car; they just want to get from A to B. Others want to own a car but can’t for various reasons.
There are about 12 million vehicles on the road in South Africa. Of these, about 2.4 million are financed and about three million are insured. Information from TransUnion, a credit bureau that stores consumer and business data, suggests that less than 15% of vehicle finance applications will be taken. About 24 million sales leads are generated every year, but the industry sells about 580 000 vehicles, of which 180 000 are new vehicles and 400 000 are used.
This tells us a few things. First, many people want to buy a car but cannot do it through traditional credit applications. One way to solve this problem is to use alternative data so that more people qualify for credit in order to buy or lease a vehicle.
While it might get more people into cars, it won’t solve the bigger problem — there’s a huge market out there that needs transportation but can’t accommodate it. In other words, South Africa does not have a vehicle ownership problem, it has a transportation problem. And although financed vehicles will remain relevant for some time, the real opportunity for the vehicle industry lies in creating alternative modes of transportation that are in line with global trends.
If we look at transport as a continuum, with pure ownership on one side and users on the other, everything in between these two points is transport as a service – such as leasing, subscription models, e-hailing, plane rides, cars. pools, public transportation and ride-sharing.
In Europe and more advanced economies, ride-hailing and ride-sharing have become the norm. This is a growing trend in South Africa, although mostly in major urban centers these days.
Several factors are driving this service mobility model. One is the boom in subscription models for all kinds of goods and services. This model offers simplicity and adaptability and appeals to many people.
Some people want to avoid the hassles of car ownership such as maintenance and insurance, while others want to avoid significant expenses and long-term financial commitments. A growing number of automakers are offering subscription models for their vehicles.
The second driver of mobility as a service is increasing urbanization. It is estimated that 55% of the world’s population lives in cities. He doesn’t need a car; they just need access to transportation – and that can include everything from public transportation, bikes and scooters to ride-sharing and carpooling.
In South Africa, we have all the necessary elements for alternative ownership models such as subscriptions. Consider renting an affordable, long-term, flexible car. We have a request; A large number of people want a mobile phone. We have a source; there are a lot of idle vehicles at dealerships – and vehicles that don’t move, don’t bring in money.
That’s why the future of transportation – and vehicles themselves – is not electric vehicles. It is only the driver of the vehicle. The future lies in the use of technology. It lies in providing the transportation that consumers are looking for. It’s about helping the industry create personalized experiences that meet the needs of individual customers.
The future lies in offering consumers the technology-savvy controls they want in any car ownership.
Personally, I can’t see myself not owning a vehicle for the rest of my life. However, as with the automotive industry, it is important to be open to change. Industry relevance depends.
Kriben Reddy is the vice president of vehicle information solutions at TransUnion Africa.
The views expressed are those of the author and do not necessarily reflect official policy or position Mail & Guardians.