The Netflix generation won’t want to own cars – here’s how the auto industry can adapt

Two women sitting laughing sitting on car
Younger consumers are drawn to the convenience of subscription services and will want the same model for using cars, Dr Andy Palmer argues.

  • Ex-Nissan COO Dr Andy Palmer argues subscription models could be the future of car use.
  • In this op-ed, he says Millenials and Gen Z are already used to such models in other areas of life.
  • They could combine the flexibility of rentals with the benefits of ownership, he writes.
  • See more stories on Insider’s business page.

A quick look at your bank statements will most likely reveal a consistent theme in each month’s transactions: payments to Netflix, Apple Music, or Amazon Prime.

A generation of consumers, and I’m one of them, have become addicted to subscription services.

Simple and no-strings-attached, subscription services seem to exist for every possible product out there. And now cars are joining the subscription surge.

The auto industry has experienced significant upheaval over the past decade.

Auto executives have dedicated most of their time and attention to adapting the physical and technical make-up of the cars they produce, such as shepherding from internal combustion engines to hybrid or electric in response to a more climate conscious market.

However, changing consumer attitudes are fuelling another major shift for the industry to contend with – and automotive executives are slowly waking up to it.

The industry has long been known for its resistance to change and may find this shift in consumer behaviour difficult to navigate. The good news is that it requires is a marketing shift rather than an operational one, which is easier to manage.

Manufacturers that already cater to a younger audience will naturally find this shift in marketing easier.

In September 2020, Volvo became one of the first brands to launch a direct-to-consumer subscription model. Sixt, the international rental service, also launched a subscription service in the same month.

For a monthly fee, Volvo gives motorists access to a car with everything but fuel included in the package. The simplicity of this appeals to younger generations and urban dwellers who see cars with less emotion and romance than those of an earlier vintage.

For the baby boomers, cars represented post-war prosperity. The VW Beetle became a generational icon in the 1960s and 1970s.

For Generation X who entered their economic zenith during Margaret Thatcher’s era of yuppies and flashy excess, cars symbolized status and wealth Millennials were a trickier sell, but were ultimately attracted to cheaper, smaller and urban-friendly vehicles to suit their lifestyles and budgets.

The lifestyles and budgets of Millennials and Gen Z are no doubt behind the reason why they are by far the heaviest users of subscription services.

To many, the beauty of the car subscription model is that it confers the convenience of car travel provided by ride-hailing apps like Uber or Lyft and ride-sharing ones like ZipCar while still giving customers their own car they don’t have to share that they can get to know and become attached to.

There is also an argument that, as zero emission vehicles become more popular, the subscription model is better suited to electric vehicles.

Over time and after excessive use, electric vehicle batteries become less effective. This means that you’ll progressively get less mileage from a single charge.

Rather than replacing the entire vehicle, which would be highly expensive and inefficient, we may see battery leasing become the modus operandi for motorists in the near future.

While Volvo’s entire car subscription package has created buzz, Renault are leading the way when it comes to battery leasing. When purchasing a Renault Zoe, buyers can choose to lease a battery on a subscription basis rather than owning it outright, reducing the price of a new car by nearly $10,000.

With the Netflix model becoming so popular in other industries, it is only logical that consumers will begin to demand this level of flexibility for more high-ticket items as habits continue to shift.

Dr Andy Palmer a former CEO of Aston Martin and COO of Nissan. He holds non-executive positions, including chair of electric bus company Switch Mobility, vice-chair of battery manufacturer InoBat and chair of EV scooter company Hilo.

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Stellantis to delay production of its Ram 1500 Classic pickup trucks due to global chip shortage

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  • Production at Stellantis assembly plants in Michigan and Mexico will be impacted, the statement said.
  • The pandemic caused a disruption in the supply chain of semiconductor chips used in cars and electronics.
  • The computer chips make up around 40% of a new car’s cost, according to a report by Deloitte.
  • See more stories on Insider’s business page.

Stellantis will delay the production of its Ram 1500 Classic pickup trucks due to the global chip shortage.

The company is currently building the trucks but delaying the completing production for a “number of weeks” at the Warren Truck Assembly Plant in Michigan and the Saltillo Truck Assembly Plant in Mexico, a company spokesperson said in a statement to Insider.

The truck will be completed when the chips become available, the statement added.

“We continue working closely with our suppliers to mitigate the manufacturing impacts caused by the various supply chain issues facing our industry,” the statement said.

Earlier in March, Stellantis CEO Carlos Tavares said that problems caused by the chip shortage may not be fully resolved by the second half of 2021, Reuters reported.

Stellantis is the world’s fourth-largest automaker created by the merger of Fiat Chrysler Automobiles and PSA Group.

The pandemic caused a disruption in the supply chain of semiconductor chips used in the manufacturing of cars and electronics. The chips are used in vehicles’ navigation systems, Bluetooth, and collision-detection systems and make up around 40% of a new vehicle’s cost, according to a report by Deloitte.

Due to the global computer chip shortage, a production slowdown in the auto industry surfaced earlier this year as some car companies changed their manufacturing plans while others searched for new suppliers.

On Thursday, Ford said in a statement that it will build F-150 trucks and Edge SUVs in North America without specific parts including some electronic modules that contain semiconductors.

The impact extends to other carmakers such as Volvo that decided to adjust its production plans temporarily for some periods in March while General Motors said it will lengthen its production cuts at three North American plants.

Automakers could lose as much as $61 billion in revenue due to the chip shortage, Bloomberg reported citing estimates from Alix Partners.

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Volvo’s second-ever EV just debuted without any leather – see the new C40 Recharge

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2022 Volvo C40 Recharge.

  • The 2022 C40 Recharge is a new, all-electric compact SUV from Volvo.
  • It has an estimated 261 miles of range and a completely leather-free interior.
  • No pricing was announced at this time, but we expect it to start at around $54,000.
  • Visit the Business section of Insider for more stories.

You can now count the 2022 Volvo C40 Recharge on the list of upcoming electric vehicles.

Unveiled on Tuesday, the C40 Recharge is the Swedish automaker’s second EV destined for the US market, following the XC40 Recharge that launched at the end of 2019. The C40 Recharge is part of Volvo’s larger goal of becoming a purely electric brand by 2030, according to a press release.

Sized lower and sleeker than the XC40, the C40 Recharge is a compact SUV that uses two electric motors and a leather-free interior – a first for Volvo.

No pricing was announced at this time, but Volvo said that production is scheduled to begin this fall. 

Keep reading to see more.

The 2022 C40 Recharge is an all-electric compact SUV from Volvo.

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2022 Volvo C40 Recharge.

It’s the second all-electric vehicle from the Swedish automaker.

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2022 Volvo C40 Recharge.

The first was the XC40 Recharge, which launched in 2019.

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2022 Volvo C40 Recharge.

Source: Insider

The C40 Recharge is built on Volvo’s Compact Modular Architecture – or CMA – platform.

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2022 Volvo C40 Recharge.

Others built on that platform include the Volvo XC40 and Polestar 2.

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2022 Volvo C40 Recharge.

However, Volvo said the C40 Recharge is its first car to be “designed as pure electric only.”

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2022 Volvo C40 Recharge.

Source: Volvo

The front of the car wears the new official design for electric Volvos.

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2022 Volvo C40 Recharge.

The familiar Thor’s Hammer headlights now have “state-of-the-art pixel-technology.”

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2022 Volvo C40 Recharge.

Two electric motors, one for each axle, power the car.

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2022 Volvo C40 Recharge.

There’s a 78 kWh battery.

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2022 Volvo C40 Recharge.

Power comes to a claimed 402 horsepower and 486 pound-feet of torque.

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2022 Volvo C40 Recharge.

Source: Roadshow

Volvo said it takes about 40 minutes to fast-charge to 80%. Range is an estimated 420 kilometers, or 261 miles.

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2022 Volvo C40 Recharge.

Volvo noted that the C40 Recharge hasn’t been rated by the EPA yet.

There’s a new, attractive rear-end design.

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2022 Volvo C40 Recharge.

Overall, the car is much sleeker and slightly lower than the XC40.

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2022 Volvo C40 Recharge.

Inside, the C40 Recharge comes natively with Google’s Android operating system.

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2022 Volvo C40 Recharge.

Customers will have access to Google Assistant, the Google Play Store, and Google Maps.

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2022 Volvo C40 Recharge.

Customers will also have a choice of color and decorative options.

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2022 Volvo C40 Recharge.

There’s also a high seating position, which should make visibility and ingress and egress much easier.

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2022 Volvo C40 Recharge.

The car can receive software updates over the air.

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2022 Volvo C40 Recharge.

And! It’s the first Volvo car to be leather-free.

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2022 Volvo C40 Recharge.

The C40 Recharge is part of Volvo’s plan to only sell electric cars by 2030.

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2022 Volvo C40 Recharge.

It’ll only be sold online, which Volvo believes will make the car-buying process much less complex.

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2022 Volvo C40 Recharge.

Volvo will build the new C40 Recharge at its plant in Ghent, Belgium, beginning in the fall.

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2022 Volvo C40 Recharge.

No pricing was announced at this time, but expect it to be around the price of the XC40 Recharge, which starts at $53,990.

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2022 Volvo C40 Recharge.

Source: Volvo

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