Over the last two decades or so, the emergence of vehicle-as-a-service (VaaS) has created a shift in the automotive sector. While finance options and outright purchase remain prevalent, the demand for more flexibility and convenience is growing steadily and there’s a greater emphasis on sustainability. 

VaaS models, which allow customers to use a vehicle for defined periods without buying it, highlight a shifting focus from ownership to usership. As consumer behaviour changes, with younger demographics increasingly open to alternative mobility services, the way vehicles are designed, used, and managed is changing too.  

As automakers integrate VaaS options into their business models, there is a developing focus on the longevity of vehicles, with product lifecycles, reusability, and data-driven efficiency at the centre.  

 

What is vehicle-as-a-service?

 

Vehicle-as-a-service is a mobility model that offers flexible access to a car or other vehicle, without the need for ownership. ‘Service’ or ‘usership’ options allow consumers to pay for access to vehicles on an as-needed basis, rather than using a long-term leasing contract or purchasing a car outright.  

 

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The range of services available under VaaS is expansive. From car sharing based on hourly or daily rentals, to monthly subscriptions with adaptable terms, these options disrupt traditional models by progressively increasing flexibility to cater to diverse consumer needs. 

Traditionally, automotive product lifecycles have been based on individual ownership, with consumers expecting to drive the vehicle for many years before trading it in or selling it on. In contrast, the expansion of vehicle-as-a-service has shifted the focus to a multi-cycle model, where a vehicle may frequently change hands or be used by different people in quick succession.  

While car ownership continues to hold cultural and practical significance, the rise of VaaS is being fuelled by broader changes in technology, economics, and social priorities. These factors are not only shaping how consumers view transportation, but are also influencing market dynamics and encouraging more focus on circular economies. 

 

Multi-cycle vehicle usage 

 

By design, VaaS encourages shared and longer-term vehicle usage, resulting in increased mileage and operational demands. The implications this has for OEMs (original equipment manufacturers) span both design and lifecycle strategies, with a greater emphasis placed on durability and reusable elements. As the way vehicles are used and managed changes, there is a renewed interest in resource efficiency and waste reduction, with environmental concerns augmenting the need for more sustainable practices. 

 

Multi-cycle vehicle usage models are a key evolution – for both VaaS and better eco-conscious outcomes. In these models, OEMs retain ownership of a vehicle for multiple usage cycles, usually up to three, to maximise profit margins over an extended period. Vehicles can be repurposed or refurbished for subsequent users, extending the value of both individual components and overall vehicles.  

 

The combined influences of environmental concerns and the evolution of VaaS have led to several automakers adopting new, multi-cycle processes which consider both an initial buyer and subsequent users. One example of this is the Renault Group’s Renew factory, which is dedicated to reconditioning used vehicles, aiming to ‘preserve the value of the product over time’. This demonstrates many automakers’ focus on extending the lifespan of vehicles in line with new approaches to usage to protect and drive revenue. 

 

When introducing strategies around standardising parts for easier replacement, using recycled materials, and considering maintenance, vehicles are built for greater adaptability and to maintain functionality across different users. For instance, as the uptake of BEVs (battery electric vehicles) grows, repairing and reconditioning batteries, alongside battery swapping, will be imperative to the long-term use of vehicles.

 

The multi-cycle usage model switches the focus from private, single ownership to multiple ownerships, addressing both operational and environmental pressures in the process. As well as catering to an initial buyer, OEMs can reach secondary and tertiary markets, with tiered pricing approaches. 

 

Changing customer demand 

 

The rising interest in alternatives to car ownership has encouraged OEMs to design vehicles that align with a multi-cycle usage, catering to the demands of consumers. This is particularly true of younger demographics who consider VaaS options a feasible substitute to buying a car and are often considered most environmentally conscious. 

 

Research by JATO in 2023 found that a third of 18-to-34-year-olds and a quarter of 35-to-54-year-olds would consider a car subscription as a long-term solution for their travel requirements, instead of purchasing a vehicle. While more of those in the 55+ category dismissed all alternatives to car ownership, a considerable percentage of this age group were interested in other options too.  

 

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These changing preferences, especially among younger generations, underscore the importance of convenience, flexibility, and sustainability over the long-term commitment and responsibility of vehicle ownership. VaaS models cater to this, offering tailored solutions like short-term rentals, flexible subscriptions, and pay-per-use options. 

 

These choices are driving OEMs to innovate sustainable manufacturing practices and product lifespan strategies to ensure their vehicles remain reliable, economically viable, and environmentally responsible across multiple ownership cycles. The rise in automotive recycling centres and multi-cycle usage offerings in recent years exemplifies this. 

 

Notably, car leases and car subscriptions were the most popular substitutes to car ownership across all age groups. Unlike some shorter-term options, these alternatives still offer reliability and on-demand access to vehicles, providing convenience without compromising on practicality. This highlights the delicate balance consumers face between enjoying flexible vehicle usage and finding a solution that aligns with their needs. 

 

A movement from ownership to usership? 

 

The way people approach mobility is shifting, reflecting broader changes in technology, economics, and social priorities. More flexible, usage-based models cater to growing demand for convenience, cost-effectiveness, and environmental responsibility. 

 

However, despite the momentum behind this innovation, car ownership remains the dominant choice, with the freedom and reliability of having a personal vehicle outweighing other concerns. Instead of an outright move to usership, it seems likely that VaaS will cause a complementary shift, driven by advancements in technology, changing consumer preferences, and the urgent need to address climate change. While it is reshaping the way we think about mobility, it is unfolding alongside enduring patterns of ownership. 

 

Stakeholders in the established automotive industry face the challenge of striking a balance – leveraging mobility service models to capture new opportunities, while preserving brand trust and market share. There must be an increased focus on designing for multiple users, with practices that prioritise reusability and efficiency. 

 

The multi-cycle usage model maximises the utility of vehicles over time, providing an opportunity for OEMs to meet new usership models, adopt more sustainable processes, and maintain relationships with customers. By innovating approaches to production and lifecycle strategies, automakers can cater to VaaS options in an environmentally friendly and cost-effective way.