Is it time to ditch vehicle ownership?

Research has shown that fleet managers and consumers are turning to ‘usership’. At Northgate, we think that Vans as a Service (VaaS) is the next logical step. Here’s our thoughts on why.

The government's Future of Mobility Report identified that the under 30s have been showing a clear preference towards usership.

Whilst 'usership' is a made-up word, it does highlight how attitudes towards ownership are changing. Research has found that people are turning to usership and that this is particularly true for younger audiences.

In KPMG’s Global Automotive Executive Survey 2019, over half of the car owners surveyed expected that they won't want to own a personal vehicle by 2025.

So why are we moving away from ownership in the automotive industry, what on earth is ‘usership’, and more importantly, what is Northgate’s concept of Vans as a Service (VaaS)?

Defining Usership

Before we can explain what VaaS means, we need to:

Define what usership is
Explain why there’s been a movement from ownership to usership

Usership is about turning things into a service

When we compare 'usership' to 'ownership', what we are really saying is that we can either treat something:

As a product OR As a service.

And whilst it seems odd to expect to be the owner of a haircut, car repair, or cleaning service, the lines are slightly blurred when it comes to physical goods like a vehicle.

Not being the owner of a vehicle seem strange. That is, until, we recognise that some things are better for us as a service.

Usage of a vehicle is practically the same whether you own it or not

Ok, you're probably never going to be able to sell your rental or lease. However, depending on the terms of your lease or van rental, you might be able to choose who uses it and you definitely have a say in how it is used.

Similarly, when it comes to the day to day use of a van or any vehicle, there's not much difference between renting/leasing and ownership.

Technology is enabling usership

Technology is making us more receptive to treating products as services in everything we do. What we are now seeing is a huge trend towards subscribing to services instead of owning products - across all industries.

The technology industry likes turning products into 'as a Service' (aaS)

There’s Software as a service (SaaS), Content as a Service, Data as a service (DaaS)... and the list goes on.

And now, with cloud storage, operating software and subscription services, this model has firmly found its place in homes across the country.

In fact, an Ofcom report in 2018 found that Netflix and Amazon Prime, two major CaaS platforms, had become more popular than pay-tv in the UK.

Businesses are starting to explore whether their product is better as a service

The 'as a service' model is not a new concept, but the technology industry has made it more mainstream. Arguably, subscribing to services is trendier than it has ever been.

Ikea have just started exploring the subscription service for their furniture. And in the fashion industry, Rent the Runway have been doing the same for designer clothing.

And, if we can move away from wanting to own our furniture or clothes, is there any end to what we can apply the usership model to?

Usership’s effect on the automotive industry

Now that we’ve given a definition of ‘usership’ and its role in other industries, we can see how it impacts the automotive industry – consumers increasingly want their vehicles as a service.

Usership is not new in the automotive industry

With leasing, rentals, and vehicle hire, the idea of usership for vehicles is well-established. Turning vehicles into a service is the next logical step from this.

At Northgate, we are introducing our customers to the newer concept of Vans as a Service (VaaS). VaaS goes beyond providing you with a van, it guarantees you a certain level of service.

VaaS gives you access to vans that are regularly maintained, replaced if they are faulty, and periodically refreshed with newer models. In other words, VaaS is the subscription model for vans.

Sometimes VaaS can be more akin to on-demand services, as we can see for private hire, sharing apps, and similar offers. At other times, VaaS is for the long-term and is more like signing up for an annual subscription.

Either way, usership is about turning vehicles into a service. As the usership model continues to develop, ownership is becoming less necessary.

The evolution of usership is raising questions over ownership

There is no question about whether vehicles are necessary. For many of us, vehicles are an essential.

However, the statistics from the government's mobility report highlights the nation is increasingly asking:

Do I need to own a vehicle?

Vehicle ownership comes at a cost that is more than its purchase price. Whether we are prepared to pay that cost depends on the value we attach to ownership and the alternatives that are available to us.

Usership addresses that last point especially, by being a compelling alternative to ownership. More importantly, businesses and consumers are finding that the usership model makes more sense for them financially.

Usership is thought to be better for the environment

With the government's target of net-zero carbon emissions, there's a growing case for usership being better for the environment as well.

The idea is that if you don't have a vehicle you won't be inclined to use it. Clearly, this isn’t an option for those who need vehicles, and this is where usership comes into play…

Between private vehicle rentals, ridesharing apps, and other usership solutions, vehicles are becoming more readily available on a ‘as needed basis’.

Usership paves the way for treating vehicles as an essential, whereas ownership promotes using a vehicle to get your money’s worth.

Ultimately, greener transport alternatives will play the biggest role in realising the government’s net-zero target, but usership does play a role in this.

Usership and VaaS is giving us a lot more flexibility

Whether you need a vehicle for private or business use, usership has shown itself to be a strong alternative to ownership. Usership can provide:

More predictable operating costs – Maintenance and servicing can be included in monthly payments.
Peace of mind –24/7 breakdown cover and replacement vehicles are included (and not just for the warranty period!)
Access to newer vehicles – You can easily hand back an old vehicle and a get a new one. Depending on your agreement, you may even be treated to regular refreshes.
Customisation – From the colour to extras – you don’t necessarily have to be an owner to make it yours.
Terms to suit you – You can choose a vehicle for the time periods that suit you.

Summary

Arguably, the technology industry is making usership trendier than it has ever been. Businesses and consumers alike are starting to see the benefits of turning products into services.

If ownership was about providing you with a working vehicle for a limited period (as defined by the warranty), usership would be about meeting your ongoing vehicle needs and ensuring you have vehicle to use when you need one.

Are you weighing up alternatives to vehicle ownership for your fleet?

Our hire options provide businesses with all the benefits of usership. We offer Vans as a Service and that means:

More flexibility in meeting your vehicle needs
Simple regular payments – reducing the headache of month end accounting
The ability to flex your fleet size up or down as needed
Servicing, maintenance, 24/7 break dover and road tax as standard
Improved cash flow with no deposit necessary* or significant upfront costs

With the UK’s largest LCV and fleet management services provider behind you, you can get reliable vans for your business and meet your ongoing vehicle needs – all from one place.

If you’re looking to find out more about the many benefits of choosing Northgate as your vehicle provider, why not speak with one of our expert fleet consultants?