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Flexible mobility enablement

Dr. Michael Zellner
July 9, 2020

The crisis has a strong impact on consumers’ behavior and mindset – not only during but also after the pandemic.

However, the situation is not hopeless. In this article we want to take a closer look at the currently resurging desire for individual mobility and explain how more flexibility in mobility products could serve current customer needs.

Individual mobility on the rise again

In our recent publication – COVID-19 and the automotive consumer – Capgemini’s Research Institute portrayed how global consumers react to the pandemic and indicated potential measures for OEMs to re-engage with consumers in times of uncertainty. Based on the response of 11.000+ consumers from 11 countries we can shed light on how consumer mobility preferences have changed. Driven by health & safety concerns, social distancing and government-imposed measures, consumers are veering towards individual mobility over public transport and shared mobility services:

Financial insecurities lead to strong demand for flexibilization

Complementing the existing global survey by the Capgemini Research Institute, we have been investigating the most effective levers to recover automotive sales from the customers’ perspective. In the Capgemini Invent Global Sales Recovery we surveyed 4.000+ customers with car purchase intentions in 5 markets; Germany, US, UK, China and India.

We discovered that besides medical and safety concerns, consumers currently also face economic challenges, probably fearing of losing employment or accepting salary cuts. As a result, we discovered that

Given that financial insecurities are currently the most important reason for postponing a car purchase, OEMs and Captives can convince customers in their purchase decisions by offering customers more flexibility in payment and mobility measures:

Flexibilization of product portfolio

Besides implementing crisis-driven measures to relieve customers in times of financial insecurity we see the flexibilization of the product portfolio itself as an adequate approach to respond to the currently evolving customer preferences. This means that OEMs/ captives should consider more flexible options for classic products in all kinds of product dimensions, e.g. offering more flexible contract durations, more flexible payment and vehicle selection or the option of flipping vehicles more often.

In fact, providers can choose to design or tare a more flexible mobility offering depending on their strategy, current product portfolio and desired target group. The goal thereby is to convince customers that their mobility demand can be met despite their financial insecurities – through less binding leasing & financing offers. In that way, vehicle utilization (e.g. dealer stock cars) can be increased and potentially new target groups attracted.

Based on these thoughts, we illustrate three pragmatic examples on how to boost flexibility for offerings which are relevant during and after the crisis to enhance the customer experience.

Example #1: Make contract length flexible

Leasing or financing contracts are traditionally tied to specific contract terms and lengths, starting from minimum 12 up to 48 months. An early termination of the leasing contract or premature “buy-out” of the leased car is usually very costly or not possible at all. Offering more flexibility when it comes to contract lengths could attract potential customers’ awareness and provide existing customers with the needed security. With regards to the increasing popularity for subscription models, it is especially recommended to also offer products covering less than 12 months. In case of the current pandemic, providers have already started to offer more flexibility with lease extensions. Toyota, GM and Nissan, for example, have extended vehicle leases to compensate for lockdown periods, tackled financial uncertainty and prevented their consumers from visiting dealerships.

Example #2: Offer flexible payment options

Introducing more convenient payment options (e.g. PayPal) or adaptable payment frequencies (e.g. monthly, quarterly, yearly) providers can also address customers’ specific preferences or needs, considering the individual’s economic situation. Especially in the case of the pandemic crisis, customers could overcome financial uncertainty or reduced working hours by deferring leases for a few weeks/ months. Some providers have already adapted payment terms for now: for prospective owners and lessees, Kia e.g. accepts first payments until up to 120 days delayed. Hyundai even offers up to six months of waived payments for new owners who lose their job between now and December 2020. Other players like Cluno and Sixt have recently even abolished activation fees in order to face customers uncertainty with more flexibility.

Example #3: Offer additional services

Another example of how to meet financial insecurities is “VW for you”. With this package offer, Volkswagen promotes carefree mobility for customers including installment insurance, unemployment protection, maintenance and service, warranty extension as well as transfer costs of contactless vehicle handover. Other options to increase flexibility could be roadside assistance, return service or charging/ fueling services.

You want to learn more on how to flexibilize your product offerings? Feel free to contact our experts Michael, Corinna or Manuel to further discuss the topic of customer demand for greater flexibility in payment, portfolio or product dimensions with us.