European mobility finance: A €25 billion growth opportunity

New analysis on European mobility offers insights into new, fast-growing revenue pools and opportunities for financial services providers.

This is a recap of McKinsey’s Automotive & Assembly Practice. The article was published on October 11, 2023. You can read the full article here.

The article discusses the changing landscape of mobility and its impact on the financial services industry. It highlights that consumers are increasingly looking for flexible ownership options in the mobility sector, and trends like micromobility and electrification are on the rise. This shift opens up opportunities for financial service providers to evolve and grow by offering solutions such as loans, leases, and subscriptions to support access to mobility.

The article identifies different players entering the mobility financial services market, including startups, rental companies, and banks, all with customer-centric digital offerings like car subscriptions.

The content is based on a comprehensive analysis of mobility market dynamics in five major European countries (France, Germany, Italy, Spain, and the United Kingdom) that together represent 50 to 60 percent of the total European market. The analysis indicates that these trends will generate approximately €25 billion in new annual revenue for mobility-finance providers by 2030, representing a 4 percent compound annual growth rate. The majority of this revenue will come from passenger vehicles and light commercial vehicles, accounting for more than 90 percent of the total revenue.

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However, the article points out that growth potential varies by market segment, with new B2B passenger vehicle financing projected to decline, while micromobility and EV charging infrastructure are expected to contribute to revenue growth. The used-car leasing market is expected to experience rapid growth.

“Being on the ground in the mobility space, we can verify that McKinsey has identified some key trends. Casi observes several financing players moving outside their core business into this new mobility finance. Our ability to make the bank’s financing products more flexible and bundle them into a broader value proposition has led to some very interesting partnerships that we look forward to scaling,” Hans Kristian Aas, Casi CEO and co-founder.

The article also outlines five strategic approaches for financial service providers to tap into these changing revenue pools:

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Efficiency optimization: Focus on optimizing operations and managing costs, particularly in insurance and traditional financing, and implement real-time data tools to predict residual value.

Growth engine: Invest in segments with significant growth potential, such as full-service leasing, car subscriptions, and financing for used cars.

Niche hypergrowth: Seize opportunities in emerging markets with high growth rates, like micromobility and charging infrastructure, but be prepared for rapid changes and uncertainty.

Specialized play: Concentrate on small to medium-sized markets with steady growth, offering tailored products and services.

Consolidation: Pursue inorganic growth through mergers and acquisitions in mature markets with declining growth.

The article concludes by emphasizing that financial service providers in the mobility sector should act swiftly to capture new areas of growth as the mobility landscape evolves.

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