Frost & Sullivan: Digital Retail, Vehicle Connectivity, and New Product Innovations Power the Global Auto Leasing Market
SEOUL–(Korea Newswire) December 29, 2021 — Frost & Sullivan recently released ‘Global Vehicle Leasing Outlook, 2021’.
According to the report, 2020 was marked as the worst year for the global car leasing market due to challenges such as low renewal rates and delayed payments. This has led to working capital management and supply chain issues, surges in maintenance costs, and fluctuations in the residual value of vehicles. However, the auto leasing market in 2021 is expected to recover from the blow of COVID-19, especially in Europe, driven by the repressed demand to replace corporate vehicles and the new business of B2C on leasing.
Driven by such demand, Frost & Sullivan predicts that the car leasing market will grow from $168.2 billion in 2020 to $173.35 billion in 2021, with a remarkable growth rate of 3.1% (CAGR). Although sales will continue to slump from 2020 to 2021 due to the COVID-19 pandemic, the industry is gradually recovering as the vaccine is distributed worldwide, and it is expected to return to the pre-COVID level in 2022.
“Factors currently lacking in the leasing market, such as flexibility and premium offerings, will drive demand for short-term subscription solutions,” said Shim Jin-han, managing director of Frost & Sullivan Korea. In addition, it is predicted that existing subscription services will drive the market growth, depending on the current market dynamics and customer preferences. Over the next three years, subscription services will enable more organized service provision, and new companies will emerge in this regard.”
In the meantime, it is true that car leasing companies have had difficulties in establishing a business model, so growth has been slow. However, as the market recovers, new revenue streams such as charging pods and charging cards are expected to emerge. Meanwhile, as the need for carbon-free vehicles has emerged due to increased awareness of environmental issues and increased fuel costs, the demand for electric vehicles (EVs) is also increasing in the car leasing market.
Trends such as electric car leasing, digital retail and vehicle connectivity will generate new revenue streams. In this regard, companies should keep an eye on the following areas.
Provide mobility solution alternatives considering flexibility and availability: focus on solutions that provide flexibility in terms of time and vehicle selection and replacement
Increase digital sales channels to revitalize new mobility solutions: Leasing companies use digital sales channels to attract both MZ generation and new-tech savvy customers
Provide electric vehicle leasing and support solutions: Leasing companies provide support services such as electric vehicle charging stations and payment cards for electric vehicle charging and powertrains to expand portfolios and create new revenue streams
About Frost and Sullivan
Frost & Sullivan is a global market research and consulting agency for major industries such as automobiles, ICT, healthcare, and energy, and has been supporting solutions for business growth of customers for over 60 years. We operate 2,200 consulting personnel in 47 branches in 29 countries around the world, and based on the results of continuous research and analysis on 12 industries and major technologies, not only growth strategies and benchmarking services, but also economic trends and promising technologies and megatrends. , identifying new business models to help government agencies, companies and investors seize growth opportunities.
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