Rent, don't buy: Younger 'asset-light' consumers increasingly eschew car purchases

This article is by Hong Sang-ji and read by an artificial voice. For many drivers in their 20s and 30s, the smartest way to own a car is not to own one at all. A growing number of consumers in their 20s and 30s are choosing to rent or subscribe to cars rather than own them as assets, according to the mobility industry on May 6. The shift reflects efforts to minimize both tangible and intangible costs associated with car ownership, such as car insurance premiums, vehicle depreciation and the opportunity cost of tying up large amounts of money in a car purchase. The share of new car purchases made by consumers in their 20s and 30s last year fell to 5.6 percent and 19 percent, respectively, the lowest levels in a decade, according to data from auto industry tracker Carisyou. The trend is accelerating alongside high gas prices and the rapid shift in mobility from internal combustion engine vehicles to software-defined vehicles centered on EVs. As technologies such as autonomous driving and over-the-air software updates evolve more quickly, consumers increasingly see more value in using the latest vehicles for a few years and returning them once the technology becomes outdated, rather than owning one car long term. "I could have bought a car through installments, but I didn't want debt," said Kim So-yeon, a 32-year-old office worker. Kim opted for a two-year rental contract for a Kia EV3 after deciding that tying up a large amount of money in a new car no longer made financial sense. "I also didn't want to deal with things like insurance fees and parking, so I decided to rent the car instead," Kim added. Car lease and rental platform Chazm reported that the share of electric vehicle contracts signed through its app surged from around 5 percent at the beginning of last year to more than 60 percent last month. "If people used to drive gasoline cars for around 10 years, the technology cycle for electric vehicles has now shortened dramatically to around three to five years," said Kim Pil-soo, an automotive engineering professor at Daelim University. "There is little reason to spend a large amount of money on a car while taking on the steep drop in resale value just three years later." The "asset-light" consumption trend — reducing owned assets to cut the costs associated with them — is gradually spreading among younger consumers in the auto market, according to industry sources. Consumers are also increasingly turning to long-term rental and subscription products because they avoid financial debt from installment purchases and insurance premium hikes after accidents. "Users increasingly want to outsource the various risks associated with vehicle ownership to platforms," a representative from Chazm said. The trend has also become popular among younger drivers with early adopter tendencies who want quick access to expensive new vehicles. Car-sharing platform Socar recently revamped its vehicle subscription service, Socar Plan, into a more flexible offering called Socar Subscription, allowing users to subscribe for periods as short as one week. The platform introduced Tesla Model X and Tesla Model S vehicles equipped with supervised Full Self-Driving (FSD) features into its new subscription service. The subscription fees for the two Tesla models were set at 1.49 million won ($1,035) per week and approximately 4 million won per month, including insurance. More than 2,000 applications reportedly poured in during a 10-day advance reservation period that began in March. "We significantly lowered the barrier to access by reducing the long wait times associated with buying new cars and eliminating upfront costs such as acquisition taxes and advance payments," a representative from Socar said. "The goal is to give users faster access to the latest mobility technologies through the Socar platform." The most popular models on Chazm, where 74 percent of its members are in their 20s and 30s, are the Tesla Model Y and Tesla Model 3. Automakers ...