News from VW Group shows younger consumers are keen to rent, not own, a car. That could shrink the market for car insurance long term as many manufacturers will inevitably bundle insurance and breakdown cover in there, alongside the monthly fee. Makes sense.
But that also means you never have to shop around for insurance again. Just update your details as you change jobs, move house, crash into someone outside Tesco etc. Of course some manufacturers may well shunt the higher risk drivers away from their white label product pool – time will tell.
Here’s the word from VW;
Millennials are keen to adopt a modern way of accessing cars that sees users subscribe to a vehicle rather than own one outright. New research by Volkswagen Financial Services UK (VWFS) has found that 61% of people aged 18 to 34 are interested in accessing a car via subscription, similar to services such as Netflix, where you can cancel anytime.
Desire for subscription cars appears to decrease with age, too, with just 39% of 35 to 44 year olds saying they’re interested in a subscription service. This drops further among people aged 45 to 54 (26%), people aged 55 to 64 (18%) and people aged 65 to 74 (11%). Volkswagen Financial Services UK’s data insights team suggests this indicates a clear generational gap in attitudes towards the digitilisation of not just the automotive industry, but of consumer behaviours generally.
With younger people more commonly consuming music, TV and even food at the click of a button, the millennial consumer is evidently keen to embrace the subscription model in other areas of their lives.
Earlier this month, Volkswagen Financial Services AG announced plans to develop and implement car subscription models for selected brands in the Volkswagen Group across Europe. The car subscription models for the Group brands will be developed on the basis of individual customer needs, brand identity and the respective product range, and by 2030, around 20% of revenue could come from subscriptions and other mobility offerings.
The move is indicative of an evolving market, with recent industry research** showing that in the UK alone 31% of drivers want flexibility to change their vehicle to suit their mobility needs, whilst 22% are interested in a subscription that allows access to various models from the same brand.
Mike Todd, CEO at Volkswagen Financial Services UK, said: “The way that people buy and rent cars is fast evolving and we need to make sure that, as our customers continue to engage more with digital technology, we make their online journey as simple and as convenient as possible. Subscription models are becoming increasingly central to how we consume content, food, and almost everything in between, so it stands to reason that people – particularly younger people – are interested in accessing vehicles in the same way.