Online sales and subscriptions will shape tomorrow’s car financing journey

This article is a collaborative effort by Max Flötotto, Benjamin Köck, Felix Rupalla, Christoph F. Schneider, Ursula Weigl, and Romain Zilahi, representing views from McKinsey’s Automotive & Assembly and Global Banking Practices.

Europe’s car market has upshifted from financing to leasing. This move should both endure and accelerate further, powered by the growing market share of electric vehicles (EVs). We also expect a shift in customer behavior regarding mobility patterns and auto financing, having asked more than 4,000 customers across Europe (France, Germany, and the United Kingdom) to reveal what they expect from the future of auto finance. We conducted this research as part of our regular McKinsey Mobility Consumer Pulse Survey, to reveal what customers expect from the future of auto finance.

Fewer than 3 percent of customers say they purchase vehicles fully online, but 29 percent of consumers indicate that they want to buy their next car entirely online.

These insights were developed by the McKinsey Center for Future Mobility (MCFM). Since 2011, the MCFM has worked with stakeholders across the mobility ecosystem by providing independent and integrated evidence about possible future-mobility scenarios. With our unique, bottom-up modeling approach, our insights enable an end-to-end analytics journey through the future of mobility—from consumer needs to modal mix across urban and rural areas, sales, value pools, and life cycle sustainability. Contact us, if you are interested in getting full access to our market insights via the McKinsey Mobility Insights Portal.

The future success of traditional OEMs, noncaptive leasing providers, and digital players will strongly align with becoming proficient at offering online and flexible ownership options. For traditional OEMs, the risk associated with not gaining this capability is significant. Two out of three respondents seeking a vehicle subscription say they would switch to another car brand if their preferred OEM didn’t offer subscriptions. Likewise, 42 percent of consumers who would consider buying their next car online say they would switch brands if their current brand didn’t offer a good online buying experience.

The future success of traditional OEMs will strongly align with becoming proficient at offering online and flexible ownership options.

Although digital players in car financing have managed to secure a head start over the past few years, the race is not yet over. Who will get there first? Will OEMs be able to transform their traditional sales and distribution approaches before digital attackers manage to steal market share? Or will independent leasing providers jump in, leveraging well-run operations and good purchase conditions? The answer will likely shape Europe’s automotive financing market as the decade unfolds.

Max Flötotto is a senior partner in McKinsey’s Munich office, where Christoph F. Schneider is an associate partner and Ursula Weigl is a partner; Benjamin Köck is an associate partner in the Vienna office; Felix Rupalla is a solution manager in the Stuttgart office; and Romain Zilahi is a partner in the Paris office.