Cleantech Market Intelligence
Peak Cars: An Urban Density Issue
In my last blog I raised the question whether the United States has hit a relatively new concept: peak cars. The evidence is falling new vehicle sales, the flattening of total U.S. fleets, and rising vehicle scrappage rates. As one of the comments in my last post pointed out, it is a difficult time to try to measure this because the economy has wreaked havoc with auto sales.
Another interesting measure that is often tied to the economy is the mileage driven. The explanation is that as the economy weakens and fuel prices climb, the number of vehicle miles traveled (VMT) will fall. In fact, the economic argument appears to hold water as the number of vehicle miles traveled rebound in 2010 on both rural and urban roads, which corresponds with a tentative economic recovery in 2010.
Another measure that seems to be closely tied to the economy is the use of public transportation. As VMT fell in 2008, unlinked transit passenger trips climbed. Interestingly, these two measures are not typically inversely correlated (in other words, as vehicle mileage climbs, transit trips also climb).
While this does not answer the question of whether the United States is facing peak cars, what it is does tell us is that the transit trips does not tie well to vehicle miles. What does all this mean for the concept of peak cars? I am not convinced that the United States overall has hit peak cars. There are definitely areas that are likely to be nearing that threshold (major urban centers like Manhattan, Chicago, or Los Angeles), but overall, the use of personal vehicles will likely continue to climb.
This last chart shows what I mean, illustrating that the total number of light duty vehicles in the United States has consistently climbed over the last two decades (with a small blip in 2002-2003). At the same time, transit passenger trips have also climbed. While this may not make much sense at face value, what it tells me is that there are definitely smaller regional affects impacting these numbers. Since transit is not located everywhere (smaller towns and rural areas) and many small towns are experiencing population growth, it’s likely that the number of vehicles are also growing.
So, the bottom line for automakers is that their marketing efforts will have to become much more localized. While the Big Three (General Motors, Ford, and Chrysler) in the past have relied on dealers and dealer groups to do this marketing for them, the reduced number of dealers and smaller OEMs who do not have the reach of the major OEMs will find their marketing budgets may need to balloon to stay on top of more dispersed U.S. automotive markets in the coming decades.