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    VEHICLE-AS-A-SERVICE

    Flexible- and usage-based – so called “Vehicle-as-a-Service“ offers – sold Direct-to-Consumer via digital channels are becoming increasingly important for the future sales model of OEMs. At Berylls, we are dedicated to this exciting topic with a specialized global VaaS-team to support our clients to master the transformation of their downstream sales model.

    CUSTOMERS TURN AWAY FROM THE HASSLE OF TRADITIONAL OFFERS

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    Customer demand patterns are changing. Vehicle ownership is no longer the aspiration of many customers, as a result of three trends:

     

    1. Flexibility: Well-educated younger people are  constantly in pursuit of different opportunities. Rigid asset ownership is not in sync with this way of life. Instead, these customers demand flexible solutions that can adapt to their environment.

    2. Technological advancements: Vehicles become outdated sooner, as a result due to shortening technology cycles for key parts (e.g. battery technology).

    3. New vehicle brands: Customers’ choice is increasing as new OEMs enter the market. Buyers are more reluctant to be tied to one make/ model for a long time. There is a growing preference for flexible offerings allowing them to switch easily.

    WHERE DO VAAS OFFERINGS SIT WITHIN THE WIDER MOBILITY ECOSYSTEM?

    Range of customer commitment, highest to lowest:

     

    Vehicle ownership:
    The customer purchases a specific car via cash or credit financing and becomes the legal owner of the car.

     

    Vehicle-as-a-Service:
    The customer either leases or subscribes to use a specific car, or gets access to one via rental or sharing offers. Either way, there is no ownership transfer from the provider to the customer during the contract period.

     

    Mobility-as-a-Service:
    Customers are passengers being moved from A to B, without getting behind the steering wheel of the car.

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    VAAS BUSINESS MODEL TARGET PICTURE

    The game changer of VaaS is that vehicle ownership does not transfer to the customer – they simply return the vehicles to the provider at the end of their contracts. As a result, VaaS providers will need to put aside the traditional OEM one-time asset sales model and think in terms of a multi-cycle sales model. In an advanced VaaS business model, providers will actively manage vehicle lifecycles using data to maximize vehicle-lifetime-value (VLV).

     

    In the target picture, cars from the new & used vehicle pool are allocated to the most suitable customer via the most suitable VaaS product. Once the contract ends, the vehicle comes back to the pool and is allocated to its next lifecycle. Eventually, the next most profitable usage of a car might not be a further VaaS cycle but a sale or recycling, which leads to a defleeting of the asset. Based on the customer insights they can generate, providers will know what vehicles to build or purchase to adapt their vehicle fleet to best meet market demands.

    VAAS TARGET PICTURE: HOLD ON TO VEHICLES LONGER IN MULTI-CYCLE MODEL

    To ensure that the business model works well, several enabling capabilities are required. Naturally, sales and fleet management capabilities are needed to both fulfill a sale and operate the vehicles for the customers. Omni channel sales management to allow a coherent customer experience and digital transactions or the right end-to-end integration of the tech stack are other enablers to call out.

    Most importantly data-driven capabilities in the Vehicle Allocation Intelligence (VAI) are important, to guarantee that for every lifecycle the profit-maximizing allocation is made dynamically.

    WHAT IS THE FUNDAMENTAL IDEA BEHIND VAAS?

    In the traditional ownership scenario, a vehicle is financed by a customer for example for a 4-year period. After the contract ends, the vehicle provider looses both the vehicle & customer as the later remains legal owner of the car. In a VaaS business model, the goal is to hold on to both the customer and the vehicle. Once a first leasing cycle ends, the vehicle is returned to the provider, arising two opportunities:

     

    First, the customer does not have a vehicle anymore, so he can be approached by the provider with a renewal offer for another car.

    Second, the returned vehicle can be offered to a second customer, e.g., via an used-car subscription.

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    And of course, this procedure repeats itself again, once the contracts end. Therefore, this business model has a clear advantage when compared to the one-off sale. Instead of having to win existing customers over and over again (and to pay related customer-acquisition-cost), they can be effectively loyalized via several direct digital interactions during their usage cycle and be kept with a relevant renewal offer. Moreover, new customer segments (including converting non-car customers) can be targeted and won with new customer centric products such as flexible and cost-efficient used car subscriptions or leasing.

     

    In consequence, VaaS models result in more “sticky” customer relationship and recurring revenue streams from the ecosystem. Long-term profitability can increase by +50-60% via VaaS offerings compared to the traditional model.

    Extensive Thought Leadership

    We are continuously publishing market leading studies in the area of Vehicle-as-a-Service and related fields. To learn more about the topic, please click on the study covers below.

    Vehicle-as-a-service: From vehicle sales to customer and vehicle lifetime value management
    Snapshot of the European auto subscription market
    VaaS: Another hole in the sinking ship in automotive aftersales?
    US Fleet: OEMS' electric blue ocean?
    Shared Mobility in a post pandamic world - the beginning of a mobility revival?
    Dealer vs. Agent
    Getting it right in Europe's fast-growing car subscription market

    Our dedicated VaaS Team.

    Christopher Ley

    CHRISTOPHER LEY

    Principal

    christopher.ley@berylls.com

    Florian Tauschek

    FLORIAN TAUSCHEK

    Senior Associate

    florian.tauschek@berylls.com

    Tobias Detzler

    TOBIAS DETZLER

    Associate

    tobias.detzler@berylls.com