South African car buyers are for the most part fairly accustomed to the idea of pay-as-you-go rather than traditional installment ownership, but there are some dramatic shifts in how drivers access mobility. is in progress.
Ghana Mushibi, WesBank Deputy CEO and CEO WesBank Retail Asset Finance
Today, very few buyers actually own their own car. In historical financial models, many buyers signed long-term installment contracts, with cyclical upgrades to new models, and new contracts every few years. Banks are actually the registered owners of most cars on the road today.
So while global mobility buzzwords and phrases such as ‘use’, ‘mobility as a service’ (Maas) and ‘pay-as-you-go’ may seem foreign, the South African trend is not too far off. Removed from overseas because it may appear.
With many new Maas models being developed overseas, vehicle ownership is by no means part of the equation. In short, these business models allow drivers to access different pools of their cars through subscription services or cycle new cars at a much higher frequency than traditional financial contracts. Fundamentally, there is little interest in owning an asset as part of a payment arrangement.
These solutions are primarily driven by next-generation demands. While Generation X and the generations before it typically lived sequential lives, climbing the job ladder, getting married, having children, and upgrading cars and homes for retirement, millennials and Generation Z has turned this linear lifestyle upside down. They want to find out how to live their best lives now, and their appetite for the historical relevance of mobility, such as residual value and lump sum insurance, maintenance and planning for the future, is waning.
The potential of the new Maas platform offers great opportunities for players such as banks and dealers to move to new ways of doing business locally. These organizations must evolve to ensure they do not keep up with outdated demands.
State-of-the-art digital platforms and vehicles
This transition requires two components: software and hardware: state-of-the-art digital platforms and vehicles.
And this is just the beginning. In the future, the platform could be used to give customers access to a range of vehicles through subscription services from peers, bank-owned fleets, or dealers. Dealers and manufacturers (OEMs) will continue to be the primary players in mobility, but their role will shift from simply providing assets for sale to providing assets for use. .
Banks are no different. The role of banks is no longer just to provide funding, but also to create a platform for dealers to access inventory in new ways.
South Africa’s mobility industry will change more in the next decade than it has in the last 50 years. Gone are the days of developing and delivering services based on the average consumer. We are moving into a new world of deploying services for individual personas.
Old-school business models and reluctance to adapt lead to corporate obituaries. Mobility as a service is inevitable.
