Revenue forecast

The revenue estimate for the base year 2023 is $100.98 billion, with a CAGR of 8.2% for the study period 2023–2028

The Impact of the Top 3 Strategic Imperatives on Flexible Mobility Start-ups

Disruptive Technologies

Why:

• Technological advancements in the mobility industry have led the younger generation of consumers to prioritize usership over ownership.
• Digital connectivity has evolved in such a way that it has created a desire for convenience, affordability, and accessibility in today’s mobility industry, a contrast with the conventional transportation sector.

Frost Perspective:

• Digital Natives: Technological advancements have grown side by side with the younger generation who are more comfortable embracing digital solutions (i.e., apps) for transportation, tracking options, hassle-free processes, and transaction security.
• Data-driven insights: Data analytics enables companies to optimize pricing, rental data, customer behavior, vehicle preference, and fleet management, which will benefit the complete ecosystem.
• These emerging technologies and platforms will help the start-up ecosystem of leasing, rental, and subscription providers form their respective sectors of the mobility industry.

Competitive Intensity

Why:

• The leasing, rental, and subscription industry is fragmented, with more than 500 players in the organized sector alone.
• Due to changing customer preferences, the mobility industry has branched out into leasing, rental, and subscription services. These services are unique from traditional ownership models and offer usage flexibility and customization per customer preference.

Frost Perspective:

• Companies can find a niche in the leasing, rental, and subscription industry to start investing. This will enable them to create a solid business model for acquiring and retaining customers (e.g., Book by Cadillac and Porsche Passport offering luxury car subscription services for a monthly fee).
• Electric vehicles’ (EVs’) market penetration is slowly progressing because governments of various countries are planning to achieve zero emissions by 2030. This creates an opportunity for mobility start-ups to own or own an EV fleet in their operations.

Customer Value Chain Compression

Why:

• The influence of technological advancements on gen Z, a population with strong digital utilization skills, enables them to enjoy a simplified overall customer journey. This helps companies respond more rapidly to changing market conditions.
• This agility could result in higher customer satisfaction and loyalty, leading to better customer retention.

Frost Perspective:

• The COVID-19 pandemic had a profound impact on businesses across various industries. This led companies to make radical shifts towards a sustainable approach (e.g., quick adoption of digital transformation, contactless services/delivery, and multi-channel integration).
• The leasing, rental, and subscription industry has started to automate processes to enhance the customer experience (e.g., automating for managing fleets, service/maintenance, and contracts).

Scope of Analysis

• The study focuses on start-ups in the flexible mobility industry, which includes only the leasing, rental, and subscription segments in Europe. The report does not cover other mobility services, such as car-sharing and ride-hailing.
• The calculated revenues come from the overall leasing, rental, and subscription sector.
• The study calculated the revenue based on the number of sold vehicle contracts, and the unit is in US dollars.
• The study covers the following European countries: Central Europe: Croatia, Czech Republic, Hungary, Poland, Slovakia; Eastern Europe: Romania, Turkey; Northern Europe: Denmark, Finland, Ireland, Norway, Sweden, United Kingdom; Southern Europe: Greece, Italy, Portugal, Spain; Western Europe: Austria, Belgium, France, Germany, Luxembourg, Netherlands, and Switzerland.
• The study profiles start-up companies by each segment (leasing, rental, and subscription).

Market Segmentation and Definitions

Start-ups in Flexible Mobility

Leasing

• Vehicle leasing is a financial agreement in which the lessee receives the vehicle from a lessor for a specific period in exchange for periodic payments.
• Typically, the lessee agrees to the lessor’s lease contract, which will contain the selected car, method of payment, duration of the lease, mileage limitation, wear and tear terms, and the end-of-lease options.
• An attractive aspect of leasing is that the lessee can drive a new vehicle every few years.
• Start-ups utilize digital platforms to enhance leasing by providing a hassle-free process for the lessee.

Rental

• Vehicle rental is a mode of transportation that involves accessing vehicles temporarily for a short term (less than a month) or long term (1 to 12 months) as per the consumer’s preference.
• Vehicle rental helps fulfill the last-mile solution for end consumers by bridging the gap between their primary mode of transportation and their final destination (e.g., airport to home).
• Start-ups have taken advantage of the technological advancements in digital connectivity to enhance the rental mobility market by providing consumers the ability to seamlessly set up their commute from point A to B with a click of a button.

Subscription

• Car subscriptions have emerged as a more flexible solution than leasing and rentals. It provides a solution for consumers that avoids long-term ownership/leasing agreements.

• The popularity of subscriptions is growing among the younger generation who value flexibility and convenience.
• Start-ups cater to changing consumer preferences, such as offering customizable subscription programs to younger generations that are seeking convenient alternatives to traditional car ownership.

Growth Drivers

Convenience & Flexibility:

The models that flexible mobility (leasing, rental, and subscription) offers are convenient and flexible in the eyes of the customers because of the choice of vehicles, accessibility, and duration of use (among other things). The customers can configure the offerings for their specific needs.

Customers' Changing Preferences:

Customers' lifestyles and preferences are constantly changing, leading them to seek more need-oriented mobility services. Leasing, rental, and subscription models cater to their needs and offer mobility without a long-term commitment.

Urbanization:

Customers are prioritizing usership over ownership, especially in urban areas with limited parking and high traffic congestion where traditional car ownership may not be practical. Car leasing, rental, and subscription services provide convenient alternatives for city dwellers.

Total Cost of Ownership (TCO) of EVs:

The TCO for EVs has always been a concern for potential buyers due to the high upfront costs. Leasing, rental, and subscription services can mitigate the perceived risk of high TCO for EVs by offering monthly payments. This makes it easier for customers to reduce the financial risk associated with EV ownership.

Technology-oriented Economy:

The on-demand economy is growing in the mobility industry, especially after the COVID-19 pandemic, because of connective digital technologies and services that fulfill the customers' present-day needs. This has made car leasing, rentals, and subscriptions more prevalent.

Corporate/Business-to-Business (B2B):

The growth of the car leasing, rental, and subscription industry has led many businesses to explore these mobility solutions for the benefits they offer the company and its employees, such as tax benefits, cost-effectiveness, employee satisfaction, salary sacrifice schemes, and corporate image/company car.

Growth Restraints

Reduced Profitability: The market for car leasing, rental, and subscription services is highly competitive, with many providers offering similar services. This competitive environment can reduce profitability.

Economic Downturn: An economic downturn could create credit and financial challenges for customers and businesses, potentially leading to cutting unnecessary spending. This could result in lower demand for these services and limit revenue for the providers. These economic uncertainties can lead to stricter lending and credit policies, making it more difficult to secure financing.

Lack of Infrastructure: The lack of infrastructure for EVs and supply chain disruptions, particularly in semiconductors since the COVID-19 pandemic, can cause significant challenges for the car leasing, rental, and subscription industry. These issues can impact the availability and operational efficiency of fleets and create a challenging environment for the adoption of EVs.

Ownership Status: The perceived status people get from owning a vehicle can discourage potential customers from considering leasing, rental, and subscription services. This cultural preference in some regions is deeply ingrained in individuals as a symbol of status or appeal. The flexibility of leasing, rental, and subscription services cannot replace the importance of the sense of ownership for some customers.

Environmental & Regulation Complications: The transition to cleaner, lower-emission vehicles in the mobility sector can pose financial and regulatory complications. This shift often involves significant financial investment, such as upfront costs, and will affect the geographic expansion of flexible mobility services because of the different emission standards, environmental regulations, incentives, and subsidies.

Depreciating Cost: Cost depreciation is a significant factor that can erode the value of assets over time for the car leasing, rental, and subscription industry. The car's age and the mileage on it can impact the resale value. This could limit the company’s ability to sustain itself in the market if it does not have a strong business model.

Key Competitors

• WeVee
• LeaseFetcher
• Multifleet Vehicle Management
• Vehiculum
• GOWAGO
• EVOGO
• Flexed
• zeVie
• Octopus Electric Vehicles
• loveelectric
• GRIDSERVE Car Leasing
• LeasingMarkt.de
• SPARK
• Renting Finders
• CARLILI
• Carbook
• Virtuo
• GoMore
• Toosla
• FINN
• Bipi
• Cluno
• Carvolution
• Onto
• imove
• ViveLaCar
• Cazoo
• Beely
• Mycardirect
• Wagonex
• casi.auto
• Vulog
• FAAREN
• CarTrawler
• STELLARDIAN
• Flexdrive