The leasing trend

The shift in consumer behavior toward retail and e-commerce experiences has made its way to the automotive industry with an uptick in leasing over the past few years. Nearly one-third of millennials chose lease options over car purchasing, with the demographic comprising 12% of all leases in the U.S., according to Edmunds Lease Market Report released in 2017. Some reasons for the increase include:

New technology — Manufacturers have enhanced the technology in cars from self-parking and lane-departure prevention capabilities to entertainment features. Much like mobile phones, consumers demand the latest technology, which is outpacing each year's car models.
Depreciation —1% of buyers owe more than their cars are worth, according to 2018 Edmunds Midyear Automotive Market Trends Report. As depreciation accelerates, a car can become less and less of a valuable asset.
Unexpected expenses — 92% of millennial car owners consider additional car costs prior to ownership, yet many are still surprised at the costs of maintenance (64%) and car insurance (68%), according to a nationwide survey conducted by Harris Poll on behalf of NerdWallet in 2016.
Financial concerns — For many millennials, the thought of purchasing a car is exciting, yet extremely stressful. In fact, 62% of millennials feel overwhelmed by financial decisions, compared to 48% of Generation X, and 29% of boomers, according to MetLife's 2018 Employee Benefit Trend Study.

Related: What's on the horizon for auto insurers?

Ripe for disruption

The evolving consumer mindset and ever-changing auto landscape provides an opportunity to meet new needs with new offerings. Car subscriptions, a new take on leasing, provide consumers with short-term car use. Subscription models cross a wide spectrum of offerings. Oftentimes, original equipment manufacturers offer month-to-month terms, giving consumers the flexibility to swap vehicles as often as the weather and seasons change. For the average consumer, however, month-to-month may not be the most feasible nor cost-effective option.

Special Reports /

An evolving auto industry requires new coverage options

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