How technology is transforming the car ownership experience?
Cars have gone beyond just being a necessity and convenience. In many societies, they’ve become vital status symbols. Owning a car is an aspiration of every generation. But there are gripes related to car ownership: annual depreciation, insurance premiums, maintenance, as well as unexpected expenses such as repairs and roadside assistance.
In an age where a wide variety of products and services can be obtained on-demand, today’s drivers want to see the automotive industry move toward a similar vein. They want to enjoy the convenience and status of owning a car without being suffocated by the traditional hassles and costs associated with it. It’s also important to know that owning a car won’t lock you into commitments, especially when you’re looking to let go of their vehicles. To do this, we need to look at the sales channels and how solutions on that front can evolve with modern demands.
Streamlining the selling experience for private owners
There seems to be no limit to the degree of disruption that technology can facilitate in industries, and the used car market is no different. In this space, we see the emergence of online car listing platforms. These tools are being used by private sellers to reach potential customers directly, and by car dealers who can benefit from being able to list more of their inventory online to reach a larger audience.
While these platforms have created more direct selling channels, they still have not resolved the fundamental issue of transparency. For private sellers, it can be challenging to go about listing the car on their own and determining the right price. Often, they would consign these tedious efforts to used car dealerships, yet this would then lead to suboptimal pricing due to the commissions and brokerage fees involved.
However, with the used car market in Thailand growing, it is now time to provide private sellers with a platform that helps to facilitate their direct outreach to buyers. We can look at Thailand’s digitization, which has been on a constant upward trajectory in recent years due to steady growth in internet, mobile, and smartphone penetration. With larger portions of Thai society entering the internet economy, creating a selling channel that taps into the convenience of online platforms can help to resolve the common pain points faced by private sellers.
Selling platforms, therefore, need to meet the demand of today’s private sellers to create marketplaces where sellers and buyers can transact directly with each other. A feature that would be particularly useful is the application of technology to analyze prices, which are more optimal (and fairer) for the seller.
On top of that, with today’s consumers demand speed with their interactions, we’re now seeing more platforms providing the option for sellers to push for a quick sale in just under 24 hours. This feature helps to accelerate the process for sellers to register with the platform and get their ad up and running with little to no time at all.
A new form of car ownership
The auto industry needs a fundamental shakeup to cater to today’s generation of drivers. According to research by CDK Global, around 60% of millennials intend to keep their vehicles for less than five years, which is even shorter than the time it typically takes for the average person to settle their loan. On top of that, our research highlights that they’d prefer to trade in their vehicle without paying off the one they currently have.
To explain this shift in attitudes, we found that, through a joint study we conducted with YouGov in Singapore, 48% of the people we surveyed were discouraged by the large sum required for a down payment, while 38% of them remained unhappy about the vast amount needed to put money down on a second-hand vehicle. We also found that, in the higher income bracket, 61% of them were deterred by a car’s depreciating value, whereas 51% of second-hand car owners in this bracket were discouraged from making a car purchase overall.
What this shows is that car demand is not subsiding. However, car owners are looking for more flexibility in their ownership. Thailand, admittedly, is a much larger market and has a different set of auto policies than Singapore, but rumours surrounding a possible central bank decision to tighten auto loans amidst rising household debt means that conventional methods of ownership may soon be even less flexible.
It is in this area where we can predict the switch from pay-per product models to lower-commitment subscription ones to gain more traction. Such subscription-based services have the potential to revolutionize the meaning of car ownership, namely by empowering consumers with the flexibility to drive their car of choice and the option to return it at any time with no strings attached. Usually, there’s also the ability to swap for a different model or a newer version of the same model.
These subscription services are being targeted to today’s consumers (mostly millennials) and, in the case of car owners, to those who need a vehicle but aren’t necessarily interested in ownership. It is an especially useful solution for people on temporary work relocations (such as the many expats working in Bangkok), other consumers for whom a long-term lease makes no sense, or simply even for enthusiasts who find the ability to drive multiple different models appealing.
A future worth driving toward
Intuitive online selling platforms and car subscription services are emerging as welcome advancements to the car ownership experience.
On the one hand, owners who have been looking to sell their car by themselves are now encouraged to do so without relying on opaque dealer channels, while subscriptions can give drivers the convenience of having a vehicle without the burdensome commitments that come with it.
It’s time that the car industry focuses on rewarding drivers by giving them what they want and, more importantly, when they want it.
About the Author
Manit Ghogar holds nearly six years of experience working within the fields of tech and finance in the United States, Thailand, and India. Having developed his skills in financial analysis, project management, and marketing, he is now the Country Manager of Thailand for Carro. Manit holds a bachelor’s degree in Finance & Economics from Boston-based Northeastern University and completed his high school studies in Finance & Information from the New International School of Thailand.