Consumers’ rapid shift to mobile devices has shaped their expectations of products and services in their day-to-day lives. Mobility trends have certainly penetrated the car market, and are on the way to changing the auto financing model too, experts say.
Even though many of the trends will not be immediate, the industry should be prepared, according to a panel at the recent AFSA Vehicle Finance Conference. Here are the top mobility trends set to affect auto finance, according to the panel.
Car Sharing and On Demand Rides
Companies like Uber and Lyft have taken the charge in the carsharing revolution. On the dealer side, this means more business, Joe Castle, dealer principal at Castle Auto Group said during the panel. “Being in Chicago, I have a ton of experience working with rideshare companies, and I love them,” he said. “They buy cars, they spend money, and they service them.” Rideshare is a big business for dealers, Castle said, adding that Chicago alone hosts more than 50,000 Uber drivers.
Car financing does fit into the rideshare model, Colin Langan, auto analyst at UBS, said during a panel 2016 New York Automotive Forum last month. “Ford has this experiment, where if you are a Ford customer you can actually share your lease with others, and I think one reason they are doing this, is to become a part of the sharing,” he said.
Connected and Autonomous Cars
The car of the future is transforming the industry today, Itay Michaeli, director of at Citi Investment Research and Analysis, said at New York Automotive Forum last month. “We have seen partnerships happen already, like the one with GM and Lyft or Cruise,” he said. “And certainly more are coming.”
Many of the newer makes are already partially autonomous, Michaeli said. “Fully autonomous vehicles are unlikely to enter the market at least for the next 20 years,” he said.
On the finance side, Guy Fraker, chief learning officer at AutonomousStuff, said that as a result, the financing process will shift to a usage-based model.
“I think the auto finance and insurance industries are the furthest behind on the connected mobility, but they have the opportunity now to propel to the next generation,” according to Fraker. That said, he added, some finance companies, such as Ford Motor Credit Co., have already began experimenting in the shared financing and payments space.
Data Monetization
Connected cars generate an incredible amount of data, and the industry is still figuring out the ways in which that data could be turned into revenue.
Some startups have taken the lead in this movement. Earlier this year, Google-owned navigation app Waze partnered with half a dozen Lyft-like ride hailing companies, which will integrate Waze software in their own apps. The software allows for real-time traffic updates for the drivers, and helps alert them of road hazards. But what it also does, is collect all the mapping data from the drivers, and sell it to Waze’s customers.
