Once autonomous vehicles enter the space, the pool of driver-owned, shared vehicles will start to “cannibalize” itself as production shifts to commercial autonomous fleets, Angus Ross, digital transformation and innovation leader at Deloitte Consulting LLP, said during a panel at CBA Live in April.
And due to this shift in production, Deloitte predicts commercial vehicle financing will make up 40% of the overall auto lending market sometime between 2022 and 2040, Ross told Auto Finance News.
“Currently, about 95% of the auto financing market sits in driver-owned [cars],” he told attendees, adding, “5% sits in driver-shared [cars] — for example, Zipcar — and zero in autonomous.” It will be 2022 before autonomous cars are a contestable reality so that 95% of driver-owned cars will reduce to about 35% from 2022 to 2040.
However, the $1 trillion question hanging over lenders’ heads, which no one seems to have a solid answer for yet, is what all of these shifts mean for the auto finance industry? Ross said.
“There is an argument that the price of the cars will go up and the volume will go down,” Ross said. “We haven’t put a stake in the ground as to what the impact is for producing X [number of vehicles] and what the margins will be. It’s more about where the opportunity is. So what does it mean to lenders? It means different things to different players.”
There are other investment opportunities for the lenders — beyond offering new business models like a shared lease or subscription carshare, Mary Chan, managing partner at VectoIQ, told Auto Finance News.
“Infrastructure investment, for example, wireless charging,” could be one opportunity, she said. A charging network is expensive to put in place, she explained, which could provide captives or financial institutions with another finance opportunity.
“But the day you put that infrastructure on the ground, what’s the business model, and can the financial institution come in and help with putting out an infrastructure like this?” Chan asked. “How do you monetize that with the energy company over time?”