Driving an expensive car is deemed as one of the top definitions of luxury among 15% of Asian consumers. While at first this may seem like a minority, the association with status is prevalent. This is particularly true in a country like Singapore, where a ‘starter car’ can average $100,000 (approximately $74,200 USD). However, the concept of ownership let alone costly vehicles is about to be turned on its head, changing the future of cars in Asian cities.
This industry is facing a challenge from the wider problem of congestion and population density, where Jakarta and Hong Kong feature in the top six most populated cities in the world. This has meant that governments and businesses are looking to regulate the volume of cars on the road, to ease the pressure of urban planning and land scarcity. Are subscription cars the answer to gridlocked Asian cities?
South Korea smart city
Although the emphasis is on being eco-friendly in the $35 billion International Business District of Songdo, the city has said that it hopes to be a role model for urban planning. Focus has been on public transport networks, cycling routes structuring buildings within walking distance to one another – do we really need private cars at all?
Cars added to the ‘banned in Singapore’ list
Singapore’s Land Transport Authority’s ban on additional cars begins as soon as February 2018, to be reviewed in 2020. These plans are to ease the pressure to build roads, especially as the state plans to heavily invest in public transport.
Uber unlocks cities
An Uber campaign in November highlighted how much road space was taken over by individuals in cars. According to Uber’s APAC marketing director, the message was about how “we can use resources like private cars more efficiently”.
Subscription cars, a possible solution?
These models have proven popular in many sectors, allowing consumers to buy into services through commitment-lite contracts that can be easily terminated.
Now, car subscription services are offering consumers rolling access to vehicles. Unlike cars on lease or rental, this model suits both long and short-term use, and bundles benefits such as maintenance, roadside assistance and insurance into one flat monthly fee. 83% of car owners and 70% of those that don’t are interested in subscription models in other sectors, such as media and FMCG products.
A subscription model for cars in the form of electric car sharing has already been given the green light in Singapore. BlueSG is rolling out the large-scale scheme aiming for 1000 cars by 2020, with fares comparable to those of taxis. Their plans have been in the works since 2014.
Lynk & Co
First launched in China this year, with its EU and US debut expected in 2018, the company promises ownership models that adapt to consumers’ lives and needs. It focuses on the millennial generation with messaging like, “We can hire a bike, rent a room or stream a song. We’re a generation that buys good times, not just stuff. Now you don’t have to own a car unless you want to”. The very concept of free choice for consumers is part of a trend we identify as Latchkey Loyalty. By not locking customers into a long term commitment, brands are able to create a more positive customer experience and retain their loyalty.
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