In the last five years, the leasing industry has experienced significant growth. According to JATO Dynamics’ latest report, An industry in flux: Leasing in the automated age, private ownership of vehicles has fallen in Europe – from 53% of total market in 2013, down to 42% in 2021. While in comparison, leasing has gained popularity – in fact, last year, it is estimated that 5 million vehicles were leased in the UK – with 1.9 million of those being individual or personal contracts.
This rise in demand for leasing can be explained by evolving priorities for consumers. Where individuals previously thought it important to own a car, perceptions have gradually shifted, and the focus is now increasingly on the usage of a vehicle. Leasing rather than ownership also reaps a number of benefits for the user, including lower maintenance costs, greater flexibility, and the ability to quickly upgrade to new models and technologies.
Leasing in the digital era
With technological advances, data and information more readily available to us than ever before, consumers now expect to consistently access new products and services. In fact, research from Salesforce found that three quarters (75%) of consumers’ site search queries are new each month. This growing desire for new products and features can clearly be linked to the rise in popularity for leasing subscriptions, rather than committing to one, single vehicle for several years.
And, this digitalisation doesn’t just translate to new automotive products and features. In 2020, 72% of customers expected to be able to apply for a leasing contract entirely online, making it clear that automation has a key role to play in automotive sales processes. As such, digitalisation will be crucial for providing consumers with a seamless end-to-end purchasing journey.
As with many changes to the automotive market, the growth in appetite for new technologies, online processes, and leasing subscriptions have presented industry players with a significant growth opportunity – with some OEMs already capitalising on the evolution. In particular, Tesla leads the industry when it comes to the adoption of digital technologies. Unsurprisingly, it also has one of the highest ratings for customer satisfaction at 90%. This emphasis on digital technologies and online processes has a direct impact on customer retention, with around 80% of Tesla customers likely to buy or lease another Tesla when looking for their next vehicle.4
With the leasing market growing at pace, it is clear that creating a frictionless customer experience – through digitalisation and automation – will be the vital next step for OEMs and leasing service providers to accelerate their sales, profit margins, and ultimately stay ahead of their competitors.
David Krajicek, CEO at JATO Dynamics, commented: “The leasing sector has evolved significantly in recent years. Impacted by many factors – such as technological advances, digitalisation, and changing consumer priorities – OEMs and leasing companies must now ensure they shift away from manual processes and adapt to changing customers’ wants and expectations. Those that fail to respond to this evolution risk damaging business relationships, sales prospects, and their chances to succeed in the increasingly competitive market.”