- Jul 25, 2013
American Drivers May Have Hit Their Peak
The "Peak Car" theory says U.S. citizens will buy fewer cars
The U.S. is consuming less gasoline and driving fewer miles than it was a few years ago, and not just because of a still-under-performing economy, says a University of Michigan study. More fuel efficient crossovers have replaced big gas thirsty SUVs in many households. Younger drivers and retirement-age baby boomers are either going without automobiles, driving less, or living in or near urban centers where pubic transport and car sharing services are handy. An increase in telecommuting means fewer miles needed to get to work. It all adds up.
The importance of all this? The University of Michigan study says we may be at a peak automotive use in the U.S. Our levels of driving, car purchases and gasoline consumption won't get above the peaks we saw in the early 2000s. If correct, that would impact auto industry and energy industry planning around auto-plant building, oil production, jobs, city planning and more.
The decline began before the economic recession, which suggests that the lower levels of driving per person and per household "could be long term," says Michael Spivak, author of the study.
How do the numbers actually look? If you look at the number of cars and trucks per person, and the annual driving miles per person and per household are all less than a decade ago. Conventional wisdom and several analysts previously thought that economic expansion and demographics (continued immigration, especially of Latinos) could drive auto ownership to almost twenty million new vehicles per year by 2020 or soon after, up from an expected 15.5 million this year and nearly 18 million at their peak in 2000.
Living and Working Off-Road and Online
But those predictions have faded. Some of the change, say researchers in and out of the auto companies, is certainly due to technology, including the growth of social media. "As people have turned to virtual social contact via online chatting, e-mail, Skype and Facebook, the burning need to get in your car and go see someone in your car declines," says Los Angeles-based marketing consultant Dennis Keene. "And there is telecommuting to work and the Amazon.com effect ... getting so much stuff shipped to your home means fewer shopping trips."
It's not just in the U.S. In other developed countries, such as Japan, Britain and Germany, the average miles/kilometers driven per vehicle has been dropping for twenty years.
And while drivers around the U.S. have been grousing about the increased amount of bike lanes and bike traffic sharing the roads with their out-of-date SUVs, perhaps they had better get used to it as motorists in other countries have. The Times of London, for example, editorialized last November: "The implications for how cities are designed and streets are used are enormous if car use really has passed its tipping point. Supporters of 'Peak-Car' theory see a future in which the inner cities are given over to pedestrians, cyclists and public transport, and café culture replaces car culture."
Life in the bike lane and in a shared car.
Indeed, European cities like Berlin, Amsterdam, Paris, Munich and Dublin look very different than those in the U.S. European cities have enormous numbers of bicycling and motorscooter populations, and it is common to see people in their 60s and early 70s still cycling, carrying their bits and pieces in a basket.
So, how are automakers responding? When the U.S. auto industry was starting to grow in the early and mid 20th century, one of the strategies employed by General Motors and Ford was to work behind the scenes with politicians to kill off street car mass transit in many cities, including Detroit, to help spur car purchasing. Today, the mentality is different.
"Ford sees car sharing as an important change in society and is already a big supplier of cars to these services and expects to remain so," says Erich Merkle, Ford's chief of sales analysis. Merkle also points to demographics that he thinks could change the "peak car" idea, and that is Millenials, a group of 85 million Americans aged 21-33, have delayed car buying. "When they start having children, many will buy cars."
Probably true, but they will have spent years driving less than their parents, and will they exchange all their non-driving/social media and telecommuting habits just because they have kids?
Company wide, companies like Ford, GM and Volkswagen have made China a top priority where car sales have nowhere to go but up. GM now sells more vehicles abroad than it does in the U.S., owing at least in part to its growth in China.
While miles per person and household in the U.S. seem destined to not get any higher, or at least surpass previous peaks, it doesn't necessarily mean car purchases will decline. In the early 2000s when housing values and stock portfolios were spiking, people added second and third cars to their driveways for reasons of vanity and personal reward if not actual transportation need. Suburbanites, for example, were adding pickup trucks to their driveways as second cars. That trend has all but vanished.
Gas Consumption Down
And gasoline consumption? U.S. automobile/commercial truck consumption peaked at 142 billion gallons in 2007. In each year since, American drivers have used less gasoline. In 2012, gas use came in at 134 billion gallons, down 6 percent off the high mark. Some of that decline is attributed to lower economic activity and to driving more fuel efficient vehicles. The U.S. government is sticking to much higher fuel economy standards that are phasing in between now and 2025. The V8 engine is all but history except in some specialty performance luxury and sports cars and four-cylinders are powering more of our family cars.
All of these facts and trends will create even more of the political debate and conflict that we have already, especially over oil exploration and production. "Freeing America from its dependence on oil from unstable parts of the world is an admirable goal, but many of the proposed solutions-including the push for more home-grown bio-fuels and for the construction of the new Keystone XL pipeline to transport Canadian tar sands oil to refineries on the U.S. Gulf Coast-are harmful and simply unnecessary [given the trends to lower driving and gasoline consumption]," writes the Earth Policy Institute.
Indeed, as the economy has improved, we haven't seen a spike in driving or gas consumption--lending credibility to the idea that the demographic and social trends causing us to drive less are here to stay.
Is it time to start start printing the "Former Gas Guzzler Nation" tee shirts?