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Car dealers to ‘supply service providers’ in future, claims Auto Trader

Auto Trader operations director Nathan Coe

Car dealers will have to “supply new and used cars to service providers” as consumers move away from ownership towards leasing and mobility solutions in the next decade, Auto Trader has claimed.

The online retail platform partnered with award-winning consumer insight research agency Join the Dots and spoke to 13,500 consumers to compile its bi-annual Market Report and found that new car ownership will be non-existent within the next 10 years as the growth of finance, leasing and subscription deals fuel a dramatic shift in the motor industry.

Auto Trader’s chief finance officer and chief operating officer, Nathan Coe, said that the changing market will require a different approach from retailers.

He said: “Rather than relying on just traditional sales, retailers will need to facilitate the supply of both new and used cars to service providers, as well as providing new types of flexible aftersales, logistics, and infrastructure services that will be required to operate (new mobility) models.”

The Auto Trader Market Report reveals that 88% of new cars and circa 30% of used are already bought on finance and while 98% of motorists who purchase this way claim they own the vehicle.

The latest Auto Trader report also shows that it is exclusivity rather than ownership that is driving purchases with most motorists (80%), especially younger drivers (86% of those aged 16-21), still wanting exclusive access to a vehicle.

The need for independence (80%), an unwillingness to share (51%) and the pure convenience of a car (48%) were all cited as the top reasons for not wanting to give up exclusive access to a car.

It said that, while ride sharing and taxis struggled to deliver this, new OEM-backed platforms like Drover or VWFS Rent-a-Car’s new scheme will offer “more flexible, convenient and cost-effective” access to a vehicle.

New bundled subscription models and more flexible ways to access vehicles will open-up the market, it claimed, adding that one-in-five (21%) of survey respondents were already open to using a less traditional ownership model (cash purchase or PCP).

This is a higher trend with Generation Z, those aged 16-21, (35%) who will make up the majority of car buyers in 2040.

Auto Trader said: “New subscription models could also be the key to accelerating electric adoption, as an overwhelming 70% of consumers surveyed for the Market Report said they would be more likely to consider choosing an electric car if they could trial one over a weekend before committing to a long-term usership agreement.

“It’s clear, that as the barriers to entry reduce, and consumers are introduced to a greater array of mainstream alternatively fuelled cars and ways to access them, the market share of AFVs will not only increase to the point it can offset the decline in new diesel registrations, but go on to grow the market too.”

Coe said that the new mobility models did not signal the death knell for the industry.

He said: “Instead they will fuel the market by making driving more accessible to a wider demographic, offering manufacturers a new way to get consumers behind the wheel, and will complement rather than cannibalise existing retail models.”

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