Jun 26 2018

Consumer Insights on Autonomous Vehicles as an Impending Market Disruption

Rising consumer ambivalence toward vehicle ownership and the rapid pace of technological advances are converging to bring new opportunities and convenience to consumers' transportation options. This report explores changing consumer perceptions about vehicle ownership and autonomous vehicles and provides key insights for credit unions to consider when they adapt, pivot, or reorganize traditional auto financing in order to meet members' needs.

Hope Schau
Hope Schau
Gary M. Munsinger Chair in Entrepreneurship and Innovation at the Eller College of Management, University of Arizona
University of Arizona
Alexander Ian Schau
Graduate Student, University of Arizona
Report Number 449

Executive Summary

Remember the thrill of finally having a driver’s license and—even better!— your own set of wheels? For decades, these were highly prized markers of adulthood and independence. But today? People across demographic segments are less likely to have a driver’s license in the first place and more likely to opt for a lease, car sharing, or ride hailing. Fewer people are choosing to personally own a vehicle through a traditional loan.

And attitudes toward driving and vehicle ownership aren’t the only things that have changed. Advances in technology and infrastructure will likely make autonomous and enhanced electric vehicles commonplace in the next two decades. Together these changes are likely to impact everything from how vehicles are owned and paid for to how they’re used and insured.

What is the research about?

To learn more about the future of vehicles and vehicle ownership, and the possible impact these changes could have on credit unions, we enlisted the help of researchers who are keeping a close watch on the access economy and the vehicle marketplace.

This report highlights findings on three trends currently shaping the vehicle landscape: rising consumer ambivalence toward vehicle ownership, the impact autonomous vehicles will have on vehicle use and ownership models, and the changing value propositions of electric vehicles.

Key insights uncovered include:

  • The popularity of short- and long-term vehicle leasing has grown steadily over the past decade and crosses vehicle makes and price points.
  • On-demand mobility—whether through ride-hailing apps (e.g., Uber, Lyft) or short- and long-term car-sharing services (e.g., Maven, Zipcar)—is a growing trend, with 15% of all US adults having used a ride-hailing app.
  • There’s a growing desire for access to vehicles instead of ownership—as evidenced by the increased use of leases and ride sharing/hailing.
  • Fewer people are getting driver’s licenses across most age segments—with the caveat that those age 70+ are actually more likely to have a license than older adults in the past.
  •  Although there is a variety of infrastructure, technological, and consumer hurdles to overcome, there is strong evidence to suggest an eventual move to autonomous vehicles in the future, which could have additional impacts on vehicle use and ownership.

What are the credit union implications?

It’s no secret auto loans are a key product line for credit unions: They currently account for 35% of credit union loans (for a total of $347.4 billion) and have historically functioned as a gateway for establishing new credit union relationships. And complementary products like auto insurance and debt protection are important sources of non-interest income.

What should credit unions do now? It might be tempting to maintain the largely profitable status quo—after all, it could be decades before things like autonomous vehicles actually play out and bring an end to auto loans as we currently know them. But this is a critical time to be aware of a shifting marketplace and to be ready to adapt.

Here are a few options to consider:

  • Get innovative with financing. Credit unions must be willing to experiment with new models of financing that reflect member preferences. Examples include flexible leasing instruments for shorter-term leasing and shared mobility loans to pay for carsharing subscription services.
  • Create new insurance offerings. While it will likely be years until liability moves from the vehicle owner to the manufacturer (i.e., in a future where vehicles are autonomous), in the near term, credit unions will need to address the reality that fewer auto sales mean fewer auto insurance sales. Organizations with a vested interest in the vehicle insurance market (such as CUNA Mutual Group and CU Direct) should focus on developing products that reflect changing consumer preferences and insurance needs.
  • Find ways to serve the fleet market. The growth of car-sharing/ hailing services and the likely arrival of autonomous vehicles could drive a move to vehicle fleets instead of individual vehicle purchases. Credit unions could position themselves as a lender and service provider of choice for this new marketplace.
  • Build off a heritage of cooperation and trust. The success of the sharing economy is heavily dependent on a foundation of cooperation and trust. These two elements are baked into the credit union mission and experience and are differentiators the system should leverage when finding ways to better address changing member needs.

Disruptive change in the vehicle marketplace is a reality that credit unions won’t be able to avoid. But a commitment to being knowledgeable, proactive, and agile will go a long way toward helping the system weather uncertainty.


Filene thanks CUNA Mutual Group and our generous supporters for making this important work possible.