The automobile leasing ecosystem very aptly supports the transition to a safe and scalable future.
12 Oct 2023 | 9723 Views | By Mohammed Turra, VP & Head, Quiklyz
Mobility has been an essential feature of humanity- first by foot, then using rudimentary vehicles, and now through advanced technology-enabled vehicles. While moving from one place to another is necessary, India’s population explosion and rapid urbanisation have resulted in an explosion in the number of vehicles on the roads.
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Mobility has been an essential feature of humanity- first by foot, then using rudimentary vehicles, and now through advanced technology-enabled vehicles. While moving from one place to another is necessary, India’s population explosion and rapid urbanisation have resulted in an explosion in the number of vehicles on the roads.
Across the country, every household in an urban setting owns a minimum of one vehicle, with the number going up in proportion to the level of economic affluence. Just in Delhi, a tier-I city at par with global megacities like London or New York, approximately 12 lakh motor vehicles were registered in 2020. With research indicating that a majority of the predicted 40 megacities will be concentrated in Asia and Africa by 2030, it seems safe to assume that traffic congestion is going to be a routine affair in many Indian cities soon. The signs are already visible. According to the TomTomTraffic Index report published in 2020, Mumbai, Bengaluru and Delhi feature among the top 10 most congested cities globally. Needless to say, a rise in traffic, while indicative of societal prosperity, also severely impacts the environment and the health of commuters.
Seamless mobility seems like an ideal option in this scenario. Touted as affordable, convenient, sustainable, and efficient, seamless mobility has been defined by McKinsey as a model in which the lines between private, shared, and public transportation are blurred. A McKinsey report suggests that seamless mobility can accommodate about 30% of commuters and reduce traffic by 10%. Inhabitants can go to work or home using a combination of autonomous vehicles, e-scooters, and existing transit infrastructure like the subway.
To make this model a reality, there is a need to focus on the four emerging trends of what industry pundits are hailing as the ‘second great inflection point’ of the automobile industry-autonomous driving, electric vehicles, connected vehicles, and shared mobility.
The shift from just owning a vehicle to a great mobility experience has its own share of apprehensions; the absolute right of ownership, associated risks related to overheads & resale of asset are just some. Leasing is a great option that offers a very good balance at this point of inflection.
The automobile leasing ecosystem very aptly supports the transition to a safe and scalable future. Furthermore, technology needs to play a greater part in seamless mobility. While there is already a great influence of technology in the automobile industry, some of tech innovations like ride-sharing vehicles, autonomous vehicles (AV) or self-driving vehicles, and electric vehicles are already playing an active role.
Connected vehicles is a journey into the future. Connected vehicles use Wireless Local Area Network (WLAN) to communicate with other vehicles in the same ecosystem. This leads to faster transfer of information. Imagine a roadblock and you relay a message to other users on the same network. A large chunk of vehicles will then avoid that intersection, leading to a smoother and hassle-free commute for many. The aim is to enhance driver experience.
EV have become a reality and are gaining quick momentum as a very strong alternative to petrol and diesel vehicles. thanks to private and public agencies promoting them. Used in all segments such as public transportation, last-mile delivery and private ownership, EVs are being brought out by many vehicle manufacturers now as they create high value for a customer. Leasing is supporting EVs very well considering some of the asset risks around this industry.
Change, though exciting, can be uncertain too. And investing in uncertainty isn’t a wise decision. For people who are skeptical or cautious about EVs, connected vehicles or any new tech, leasing can be the right financial option to move into the future of transportation. Owning an asset can mean immense liability. This is especially true for vehicles, that incur maintenance and other costs every year. Among the multiple benefits is the fact that you can upgrade your vehicle now and then; thus, enjoying the experience while bypassing the responsibility.
Leasing vehicles is the future, and businesses understand this too. Many companies are now allocating funds to employees for paying vehicle leases. This not only shows their appreciation towards employees but also allows them to provide their valuable workforce with a safe and hygienic mode of transportation in a world where social distancing has become the norm.
Mobility is at the core of the requirement. That is what business, individuals, or corporates actually want. They do not want the hassles of buying and selling, maintenance and insurance, repairs and servicing, and many more such things that come with owning a vehicle. Mobility is what is needed, and leasing provides just that. Serving the basic core requirement stripping off from the asset all the extra troubles no one asked for. Paying for the usage rather than asset is what makes economic sense as well.
Mohammed Turra is VP & Head, Quiklyz, Vehicle Leasing & Subscription Business Mahindra Finance. Views expressed are those of the author.