DUBBED ‘Netflix’ for cars, digital-only startups are popping up to take a slice of the lucrative vehicle leasing market
These give consumers the option to pay a set monthly subscription fee which includes insurance, maintenance, road tax and many other typical motoring costs.
Tom Preston, Managing Director at Hippo Leasing said: “Car manufacturers such as Volvo, Ford and Jaguar Land Rover have already responded to this modern concept of car ownership in a bid to make themselves more accessible to existing and new customer bases.
“Similarly, Cazoo is a new player set to enter the automotive market this summer, headed by Zoopla founder which will specialise in used-cars.”
Preston said the appeal of car subscription services lies in their simplicity and flexibility. However, this doesn’t necessarily mean customers are getting the best price for each component offered as part of their monthly fee.
He added: “The rising popularity of the subscription model notwithstanding, the car leasing market has consistently demonstrated its agility, responsiveness and resilience to new developments.”
The UK government published its ‘Road to Zero’ strategy last year, detailing its aim for at least 50% of new cars to be ultra-low emission by 2030 and ending the sale of new petrol and diesel vehicles by 2040.
Preston said: “Whilst we have a few years to go until this point, the UK has started making headway on electric vehicles and both businesses and consumers are planning ahead. In particular, consumers are turning to electric car leasing in order to take part in the EV revolution, but at a more affordable price point.”
According to the BVRLA, hybrid and pure EV leasing is up (6.7% and 0.3% respectively) in Q3 2018, compared to diesel which fell by almost 70%.
With EVs depreciating quicker than their traditional counterparts, leasing customers avoid this pitfall and are able to keep up with the fast-moving EV technology market by regularly upgrading their model.
Preston said that as the financial climate shows no signs of becoming more certain in 2019, he expects the trend for used car leasing to continue to increase as an attractive, and often more affordable, alternative.
“Despite leasing companies not being able to offer the exact model, colour or spec in the same way they can for a new vehicle, used cars are typically cheaper to lease and will likely have cheaper insurance options, making them an attractive offer for both personal and business customers, particularly in times of economic uncertainty.
“Second hand no longer means second best. With increased durability, modern vehicles with a few years under their belts are now less likely to show signs of previous use.”
In the age of “click and collect”, the idea that vehicles, like any other product, should be available instantly online with quick delivery options is catching on and the automotive industry needs to keep up.
Preston said that leasing companies, including Hippo Leasing, will continue to develop and invest in seamless, hassle-free and fast car leasing journeys to ensure the process is just like placing any other order online.
He added: “We’re already seeing same-day collection and 48-hour delivery offerings become commonplace, so the next phase will be extending the in-stock ranges available and cutting these time frames even further.”
