The "Car-Ignoring" Era
20 January 2016
Have we reached our "peak car" moment? The decline might just have begun. Join the movement #swapcars #hopsee
When it comes to cars and young people in America, every trend line is pointing down-right. Car sales? Down 11 percentage points. License ownership? Down 28 percent. Miles driven? Falling fast. Car companies hope this is a peculiar outcome of the U.S. recession. But in fact, the move away from cars is bigger than the U.S. (and bigger than the recession).
Carpooling is the new rage in Europe, the New York Times reports this morning, where Paris-based BlaBlaCar and Munich’s Carpooling.com are “global leaders in ride-sharing.” The companies claim more than 6 million combined users (some overlap is probable), and their growth has even attracted the attention of Silicon Valley investors. Their success parallels Zipcar, the foundational American car-sharing company, which claims 700,000 members in the United States.
Who wants to invest in a hippie-dippie scheme to monetize carpools? Somebody looking at the bigger picture.
Maybe something like this picture, right above. As the world’s richest economies pack densely into cities to escape the new normal of gasoline prices, miles driven in passenger vehicles have either hit a ceiling or started to decline in the U.S., Japan, Germany, the UK, and France. Australia has seen the same decline in car travel. The most important detail in this graph is along the X-axis: The decline in average car miles isn’t a recession trend. It’s just a trend. In the U.S., the global capitol of car enthusiasts, total miles traveled peaked in 2004, the Economist reported, and per-person travel hit a peak in 2000.
As Jordan Weissmann and I reported, car marketers are both accepting and pushing back against the “peak car” moment in the West. They understand that a weak economy makes big-ticket purchases hard. They understand that young people are getting crushed between expensive education and cheap jobs. They accept that cars have lost that halo of hipness they owned in the 1970s. But they also see a future beyond peak car abroad.
In 2011, the world added 60 million new cars. The United States bought 12 million of them. Europe bought another 13 million, and Japan bought about 2 million, the lowest since the late 1960s. That means that about half of last year’s new car sales came from developing economies, for whom “peak car” is a date far in the future.
A Deloitte study from 2011 looked at the market for cars in Brazil, Russia, India, and China (which, alone, accounts for more car sales than either Europe or the United States). That story in a nutshell: In 2001, none of these countries bought more than 1.5 million cars. Last year, they accounted for more than 20 million total car sales (China grabbed 14.5 million, slightly below the estimate in the graph below).
But developing countries will reach their “carpooling moment” much faster than the West. In the next few years, their projected growth will slow. Brazil’s economy is retrenching fast, while growth in India and China is slowing down at a rate that is frightening economists. But even with strong growth from all the BRICs, there are structural challenges. Jakarta, cars are growing ten times faster than road construction, the Economist reported, and massive public transit like the Shanghai metro (which covers 80% of the city and carries 8 million people a day) provide a persuasive alternative to cars in a $4-a-gallon world – or whatever gas prices are ten years from now.
In fact, ten years from now, the most important story in cars might not be peak car, but driverless cars.