Have Developed Countries Reached Peak Car? October 2013
Subscribe to Insights in Brief to be notified about new Featured Content as it becomes available!
Peak car is a hypothesis that the United States (and other developed nations) may be reaching a peak in consumers' traditional car use (particularly in cities), beyond which either a flattening or a continued long-term decline will occur. The notion is that a host of factors affecting demand for cars may be interacting in complex ways to cause a decline in consumers' car use. In addition to economic forces and demographic changes, cultural shifts in consumers' lifestyles and attitudes, government policies, urbanization, advances in communication technologies, and traffic-planning issues may all be in play to varying degrees.
Car use has variable definitions and measurements. Car use can be distance traveled in kilometers—per trip per day. Traffic engineer Bastian Chlond measures traveled kilometers in six developed countries between 1970 and 2010. Dr. Chlond's study shows that in the United States, traveled kilometers peaked in 2000 and then declined steadily to 2010. During the same period, traveled kilometers by trip per day in France, Germany, Great Britain, Norway, and Japan are either flat or have not increased significantly.
Another measure of car use is the rates at which young people acquire new driver's licenses. In the United States between 1994 and 2012, the incidence of adults ages 18 and older who have a valid driver's license has not changed significantly: 87% in 1994 and 86% in 2012, according to GfK/MRI's spring studies. However, the incidence of having a valid driver's license for young adults between the ages of 18 and 24 trends down: from 83% in 1994 to 74% in 2012.
Or simply, one can define car use in terms of reported and projected car ownership. At a recent International Transportation Forum, Phil Goodwin, professor of Transport Policy, used actual and Transportation and Road Research Laboratory (United Kingdom) forecasts of cars per 1000 people to show that since 2000, the increase in car ownership has leveled off—fewer than 450 cars per 1000 people. In the United States specifically, the number of households that own any vehicle has declined from 78% of households to 72% of households between 1994 and 2012, according to Strategic Business Insights' (SBI's) proprietary MacroMonitor surveys (see the August 2013 MacroMonitor Market Trends Newsletter).
Several aspects of peak car are under study. A number of studies—for example, a study of German men (see www.sciencedirect.com/science/article/pii/S09666923120001317 —show a more pronounced decrease in car use among young adults. But is the reported decline among youths indicative of structural changes in lifestyles or a consequence of economic factors (particularly income, employment, and education)? Are reductions in car use among men offset substantially by increases in car use among women? (see www.usatoday.com/story/money/cars/2012/11/12/women-drivers-men-licenses-roads/1700185/ ).
Overall, the future may see fewer drivers; the decline in fertility rates bodes fewer potential drivers. The fertility rate for developed countries has fallen, according to the 2013 Central Intelligence Agency Fact Book: "A rate of two children per woman is considered the replacement rate for a population, resulting in relative stability in terms of total numbers. Rates above two children indicate populations growing in size and whose median age is declining." Of industrialized countries, only France and the United States have birth rates above two children per woman (2.08 and 2.06, respectively), yet car ownership and use in the United States is in decline. Even among BRIC (Brazil, Russia, India, and China) countries, only India, with a birth rate of 2.55, is likely to increase in population; factors such as initial cost and ongoing cost of ownership will constrain consumers. How will demographic changes affect car ownership among income groups such as high-income earners?
How will increased longevity—life expectancy—affect car ownership and use? Might it be a possible balance to declining car ownership among young adults? Will mature adults be interested and able to remain independent drivers? People in developed countries live longer than do people in less-developed countries and are likely to keep driving. Of developed countries, the United States has the lowest life expectancy (age 78). However, because of population size, household income, and existing highway infrastructure, the United States may, for the foreseeable future, remain the world's single-largest market for vehicle sales.
How might new vehicle technologies, such as self-parking or driverless vehicles, extend the driving life of mature citizens? Which US consumers might adopt these technology-rich vehicles early, and at what rate? In cities where reliable mass transportation is available, can use of smart-phone apps to manage commutes effectively lure drivers to abandon congested highway traffic in favor of buses and trains? Small studies in Boston, Massachusetts, and San Francisco, California, found that some people are receptive to that last idea (see www.wired.com/autopia/2011/04/how-smartphones-can improve-public-transit ). Smart-phone apps under test, such as the one from SideCar, allow people seeking a ride to hook up with people willing to provide a ride, effectively allowing private car owners to become taxis (see http://bits.blogs.nttimess.com/2012/06/26/a-new-ride-sharing-service-turns-private-cars-into-taxis/ ).
The majority of—if not all—car manufacturers are aware of the facts and figures about the decline in vehicle sales. Hypotheses abound about possible underlying cultural changes in play, but no studies have yet used a validated method to understand what, if any, cultural changes are taking place. SBI's Peak Car? study will use VALS™—a proven segmentation method—to shed light on critical variation in the ways consumers arrange their lives and the motivations they apply to make transportation decisions. Furthermore, SBI will use a variety of research methods to create a comprehensive picture of the mobility landscape in the United States and any potential, unfolding changes within the country. A major goal of the study is to determine how strong the evidence for the Peak Car? hypothesis is relative to that of alternative hypotheses. Subscribers to the study will be able to apply these insights as a foundation in their own internal planning for creating comprehensive mobility business models or simply to find out the extent to which Peak Car? might influence their business. Of necessity, competition for vehicle buyers will intensify.
Contact us to learn more about Peak Car? and how your company can become a subscriber.