Autonomous driving and the impact on the leasing industry

The coronavirus pandemic was extraordinary for modern mankind. For the first time in a long time, the number of kilometres driven and flown per inhabitant fell in the vast majority of countries. Yet increased mobility is a fundamental trend in the development of humanity to date.

Autonomous driving promises a major change in the way we get around. Above all, it promises major time and cost savings. This is because drivers can use their driving time for other purposes - in the car for work or better leisure activities, in freight mobility to take on coordinating and organisational tasks.

But when will autonomous driving be ready for the market? Which brands will dominate the market for autonomous driving? In our study "Autonomous mobility & the future of automotive finance", we asked more than 30 experts how they assess the market environment and what developments they expect. We placed a particular focus on the impact on the leasing industry.

The demand for mobility for road transport in Europe remains stable and has hardly changed, even taking Covid-19 into account. The leasing market is expected to outperform the overall market for new vehicles due to the growing share of companies and greater acceptance in the retail sector. Leasing will be the key to the new mobility, breaking the concept of one-off sales and moving to a service model with higher utilisation. In contrast to the one-off sales market, which is expected to grow by 3.9% annually between 2021-2025, the leasing market is expected to grow by 4.7% annually over the same period.

The race between technology and automotive companies to find the best solutions for autonomous driving remains open. Connected, shared and electric vehicles are already widespread, but autonomous driving is the missing piece of the puzzle for the final realisation. The entry of autonomous driving into the mass market will depend heavily on the orchestration of the following four success factors:

Technology: connectivity will be essential for the full application of autonomous vehicles, this emphasises the importance of building a nationwide 5G infrastructure. In addition, the costs for sensor and vehicle technology must be reduced and economies of scale utilised in order to promote a profitable rollout in the mass market.

Social: Ensuring broad customer acceptance, clarity on ethical and moral accident decisions and the inclusion of non-mobile or currently excluded road users (e.g. younger, older or disabled people) can contribute to the success of autonomous driving in the mass market.

Regulatory: In terms of regulation, it is crucial to harmonise or define legislation and road licensing (e.g. setting cross-border safety standards) and to set an agenda for insurance regulations in case of accidents (e.g. human vs. autonomous driving).

Economy: In contrast to the decreasing number of vehicles, the number of journeys will increase and prices for private transport will fall. Additional cost-cutting potential in public transport and freight transport can be realised through lower personnel costs, higher capacity utilisation and further subsidies for autonomous driving.

The potential applications of autonomous mobility will change the way we get around more radically than ever before. Autonomous mobility will require first-class leasing solutions with a focus on flexibility, customer-orientation and value creation. The leasing industry must adapt to the new realities and ensure it does not lose market share to specialised new entrants if it is to play a key role in autonomous mobility and the value chain. However, the opportunities for a rosy future are currently excellent

The following factors will play an important role here:

• Autonomous private vehicles: customer centricity and assessing the future viability of its own product portfolio could prove useful in identifying new sources of revenue.
• Autonomous shuttles: defining one's role and seamless integration into the smart city ecosystem.
• Autonomous freight transport: Rethinking your own value chain and transforming into an as-a-service provider.
• Robo-taxis: Upgrade core competences to make the transition from existing fleet leasing to next-generation fleet solutions.

The leasing industry is changing! In order to become part of the autonomous mobility value chain, it must adapt at an early stage.

• 90% of KPMG managers assume that the use of cars will shift from the pure ownership model to mobility services in the future.
• Leasing will be the key to the new mobility, breaking through the concept of one-off sales and moving to a service model with higher utilisation.
• The entry of autonomous driving into the mass market will depend heavily on the orchestration of the four success factors: Technology, Social, Regulatory, Economic.
• Autonomous mobility will require first-class leasing solutions with a focus on flexibility, customer-orientation and value creation.
• Leasing companies must protect themselves from losing market share to specialised new entrants.
• Customer centricity will be crucial when it comes to autonomous vehicles. Assessing the future viability of their own product portfolio could prove useful in identifying new revenue streams.