Leasing needs to innovate in two ways: Do away with fixed terms, and offer all-in-one monthly payments, Georg Bauer, co-founder and president at Fair, said at Auto Finance Innovation 2017 Wednesday.
Millennials don’t understand leasing, residual values, and money factor, he told attendees. “[We] need to define a [new] product, because today millennials like having an easy process, but they hate commitment,” Bauer said. “I think the next step for leasing has to be no fixed term, or a different way of term,” he said, and offer full-service leases — which are leases that include servicing, maintenance, and insurance in one payment.
Some traditional lending techniques are going to be replaced by new ownership models, such as mobility-as-a-service, full-service leasing, or flexibility around lease terms, he added.
Full-service leasing — popular in France, for instance, through companies like ALD Automotive — is not widely offered in the U.S. “I think that’s where the opportunity is,” Bauer said. “Leasing isn’t going to go away, and car ownership isn’t going to go away, but we have to bring it to the next level.”
