Cars, no longer a product but a service

Cars, no longer a product but a service


To free up people's time and resources, eliminate the stresses typically associated with owning a car, and leave only the pleasure of driving and mobility. This is the mission to which the many new long-term rental formulas that are progressively replacing ownership in the automotive market aspire. More than a new business model, therefore, a new culture of mobility that changes every aspect of the market. "In the last 10 years, rental has more than doubled its weight in the Italian market, going from about 8 percentage points on registrations to over 17%", confirms Andrea Castronovo, Bocconi graduate in International Economics, and today president of Alphabet Italia, an NLT company of the BMW group.

What, in your opinion, is the secret of the success of rental formulas in the car market?
Growth rewards a formula that is simple to understand and explain, a “convenient” product not in the sense of economic, but in the sense of easy and useful. The customer who chooses rental does not need to scout to find the best insurance offer, nor to negotiate repairs with the mechanic or the dealer but has a complete solution that allows him to save time and avoid surprises. There are no additional costs, and they benefit from a premium service and continuous assistance. This formula is able to meet the needs of companies, freelancers, but also individuals. In a market like Italy, it is estimated that the rental share to individuals has now exceeded 10%, if we look at the data coming from the new digital channels, the share of private individuals reaches almost 50%.

So, what does Alphabet represent in the galaxy of a group like BMW? Is it an investment, a control, a promotional vehicle?
Alphabet is the group's window on the changing world, on constantly evolving mobility needs, on increasingly attentive and demanding customers. Alphabet has always shown that it knows how to anticipate industry trends and customer needs with innovative and flexible products and services, while providing the group with new growth opportunities. That’s because we accompany the customer throughout his life, responding with ad hoc solutions to every need for mobility: from cars for novice drivers to cars for the whole family, as well as sports vehicles and commercial vehicles for business.

In your opinion, how will the diffusion of rental change the appearance of the manufacturers and the habits related to mobility?
The car is, and remains, a fundamental element of individual mobility and should no longer be seen only as the second item of family expenditure after the home, but as an essential tool of a mobility system in which the car is a nodal part, almost irreplaceable, especially on some occasions. At the same time, other services are becoming increasingly important that simplify their use and thanks to which, for a single fixed monthly fee, the motorist can delegate every task, from road tax to insurance, to maintenance and claims management. Through Alphabet there is also the possibility of using complementary mobility formulas, whether they are cars for a week or a month or alternative mobility solutions to the car. In the first case, we meet the needs of a family unit or a company that may vary over time. In the second case we operate in support of micro-mobility and mobility in urban areas according to a concept of integrated mobility, short-range travel, the so-called “last mile”, in a practical, economic and, above all, eco-sustainable way. The offer is therefore becoming increasingly integrated and flexible, to support all needs, whether it is an alternative commuting to the car, or the simple last mile route, for multimodal, flexible, efficient, sustainable and safe mobility.

Italians are perhaps more tied to car ownership than others, does this make our country a more difficult market for your business?
Rental develops differently according to the various markets but there are other variables that affect it. The sector is strongly influenced, for example, by the tax advantages or disadvantages associated with this formula. If there are “benefits in kind” on company cars, companies provide them, where there are none, they opt for other benefits or welfare formulas. Unlike other European countries, Italy is characterized by a high penetration of services in contracts, by being one of the most advanced markets in the offer to individuals and freelancers, and by close collaboration with the dealer network.

Andrea Castronovo graduated in Political Economy with specialization in International Economics in 1989 at Bocconi and with a Master in international management at the Ecole des Hautes Etudes Commerciales in Paris. He worked for The Boston Consulting Group, Ferrari, Michelin, Renault, covering various managerial positions before joining the BMW group in 2007 as president and CEO of BMW Italy, later becoming CEO of Central & Eastern Europe. Since February 2018 he has been in Alphabet where he now holds the role of president.

by Emanuele Elli

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