Over half of car users prepared to give up ownership in favour of leasing

Survey finds consumers are likely to move to an access-driven and on-demand model as their favourite mode of transportation over the next decade

By RAHIMI YUNUS / Pic By MUHD AMIN NAHARUL

MORE than half of adult Malaysians are willing to give up car ownership and rely on long-term car rental if doing so was convenient and easy, a study revealed.

Research by Avis Budget Group Inc, a leading global mobility solutions provider, found 51% of respondents in Malaysia stating that they are likely to give up car ownership and opt for long-term car rental or subscription services if it was convenient and easy for them.

The report found 97% of respondents said owning a car is important and 67% still see cars as the ideal mode of transport.

In the report entitled “The Road Ahead: The Future of Mobility”, 73% of respondents feel comfortable having their data accessed and shared for the implementation of smart infrastructure and a better travel experience.

Based on the survey conducted in 16 countries across Europe and Asia, including Malaysia, respondents said consumers are likely to move to an access-driven and on-demand model as their favourite mode of transportation over the next decade.

“Changing needs and the expansion of the sharing economy offer both challenges and opportunities for the mobility industry. Our research has shown that while consumers are expectant of connected, integrated and on-demand services, they still want convenience at a reasonable price,” Avis Budget International president Keith Rankin said in a statement yesterday.

Avis Budget added that the single biggest factor leading the transport revolution is technology, particularly 5G networks.

Malaysia is starting to roll out the 5G network and become one of the first Asian countries to launch the technology and support the growth of future mobility.

The Malaysian Reserve (TMR) previously reported that car subscription schemes are a real threat to car ownership.

Renting a car on a monthly subscription basis has become the latest emerging disruptor that could throw into disarray the widely accepted, but high-cost car ownership practices.

The new scheme, which allows subscribers to pick and use a car for a month on a fixed rate, eliminates the costs related to owning a car like insurance, road tax, maintenance and value depreciation.

Most cars lose about 10% to 20% of their purchase value a few months after they are driven out from the showroom.

The car subscription scheme will likely hurt car sales as purchasers can opt for the short-term and flexible scheme.

Analysts said car subscription services would have an impact on vehicle ownership in the long term.

“In the medium and long terms, vehicle subscription, combined with ride-hailing, ride-sharing and car-sharing, will indeed impact vehicle ownership. The uptake of vehicle subscription will increase once original equipment manufacturers and leasing companies start pushing affordable monthly subscriptions to the mass market,” GlobalData plc head of automotive consulting Animesh Kumar told TMR.

Last month, a new car subscription platform called Flux made its debut, offering users an all-inclusive monthly car subscription service with zero down payments and a flat fee that covers insurance, road tax and maintenance.

Flux Sdn Bhd, a start-up founded by Aziz Ayman and former central bank governor Tan Sri Dr Zeti Akhtar Aziz, offers subscription plans based on time period and members can switch cars throughout their subscription with a standard switching fee.

Flux’ fleet of cars include Kia Picanto (RM814 per month), Toyota Vios G (RM1,308), Honda City S (RM1,428) and BMW 630I GT M Sport (RM8,837), according to its website.

GoCar Mobility Sdn Bhd is another player in the vehicle-subscription space offering flexible mobility solutions to users.

Apart from start-ups, established carmakers have also opted for vehicle subscription by introducing subscription options besides their normal sales plans.

Renault via Tan Chong Motor Holdings Bhd introduces subscriptions for Renault Captur from RM1,299 per month; Renault Koleos for RM2,299 per month; and Renault Megane RS for RM3,999 per month.

According to the PYMNTS Subscription Commerce Tracker, the global car subscription market is forecast to grow 71% by 2022.