‘Peak Car’ is upon us

Several analysts believe auto sales growth has reached its limit as an increasingly urban world rejects hassles, expenses of car ownership


Advertise with us

SOUTHFIELD, Mich. -- The world that Henry Ford put on wheels is poised to stall.

Read this article for free:


Already have an account? Log in here »

To continue reading, please subscribe:

Monthly Digital Subscription

$4.75 per week*

  • Enjoy unlimited reading on winnipegfreepress.com
  • Read the E-Edition, our digital replica newspaper
  • Access News Break, our award-winning app
  • Play interactive puzzles

*Billed as $19.00 plus GST every four weeks. Cancel anytime.

Hey there, time traveller!
This article was published 01/03/2014 (3375 days ago), so information in it may no longer be current.

SOUTHFIELD, Mich. — The world that Henry Ford put on wheels is poised to stall.

Several auto-industry analysts predict “peak car,” a point at which annual global sales growth will top out, in the next decade. Researcher IHS Automotive, for one, sees annual sales cresting at 100 million within that time.

Pollution and gridlock are putting a damper on driving in the globe’s growing megacities. More young North Americans are opting for public transport, bikes and vehicle-sharing. Cars on the road are lasting longer than ever.

Alexander F. Yuan / Associated Press file Pollution and gridlock are putting a damper on driving in the globe's growing megacities. More young North Americans are opting for public transport, bikes and vehicle-sharing.

All of that may herald a new era for an auto industry weaned on a century of global growth.

Peak Car is at odds with the ambitious expansion plans of global automakers, which IHS says are gearing up to produce more than 120 million vehicles by 2016 — almost 50 per cent more than last year’s worldwide sales mark of 82 million.

Driving this upheaval is a rapidly emerging reality: The vehicle that ushered in an unparalleled era of personal mobility in the last century is, in many cases, no longer the most convenient conveyance, particularly as more of the world’s population migrates to big cities.

No one is predicting car sales will suddenly fall off or that today’s car companies are now dinosaurs. What experts do see is a reckoning for car companies, which may have to adapt to a world with less car-buying and more car-sharing, more cars that drive themselves and fewer hot rodders on the highway.

“The key question is: Do you sell cars or do you sell mobility?” said Tim Ryan, New York-based vice-chairman of markets and strategy for consultant PricewaterhouseCoopers. “If you ignore these megatrends, you run the risk of becoming irrelevant.”

Many automakers are preparing for changing markets with cars that can be shared, or speak to one another in a bid to keep traffic from jamming. General Motors’ EN-V autonomous two-seater, a vehicle engineered jointly with Segway that can detect and avoid obstacles, is being tested in Tianjin, China.

“We have looked at the urbanization trend very closely,” said Jim Cain, a spokesman for Detroit-based GM. “It’s driven experiments like our EN-V program in China and our involvement in services like car sharing.”

The case for growing gridlock has been presented by PricewaterhouseCoopers, among others. Today, half the world lives in urban areas. During the next decade, there will be a 25 per cent to 50 per cent increase in urban dwelling, as about 1 billion people move into cities, PwC estimates.

In 25 years, there will be 9 billion people living in urban areas — more than the entire population of the Earth today. If they are all driving cars, gridlock could block the path of food, water and emergency medical treatment in urban areas, said Ryan.

“People won’t stand for spending 25 per cent of their life commuting. The way they will get around will be different.”

In the U.S., 44 per cent of people would prefer to live in a city with automated “driverless” cars that would reduce congestion, according to a new survey from Intel. Already in the U.S., where automotive ownership has long seemed a birthright, almost one in 10 households doesn’t have a car, up 5.7 per cent over the last five years.

More young people aren’t getting a driver’s licence, once a rite of passage. In 2010, 69.5 per cent of 19-year-olds in the U.S. had a driver’s licence, down from 87.3 per cent in 1983, said Michael Sivak, director of sustainable worldwide transportation at the University of Michigan Transportation Research Institute in Ann Arbor.

Better-built cars are damping demand for new ones: The average age of autos on the road today has reached a record 11.4 years, researcher R.L. Polk & Co. says.

Alternatives to auto ownership are emerging, such as ride-sharing companies. In Winnipeg, Peg City Car Co-op operates a fleet of eight cars that’s shared among more than 140 members.

Ultimately, urban dwellers will order a ride to work on their phones, get picked up by a driverless car and whisk through traffic controlled by satellites and sensors that get them to the office safely and quickly, said Thilo Koslowski, auto analyst for researcher Gartner Inc. of Stamford, Conn. U.S. regulators said this month they’ve begun working on rules to let vehicles communicate via wireless chips while on the road.

For the world’s automakers and suppliers, that means making cars won’t be enough anymore, Ryan said. They have to transform into transportation-service providers that cater to consumers who don’t want the hassle and expense of owning a car and instead just want to rent one that comes when summoned.

Many are laying the groundwork. Preparing for driverless cars and vehicles that talk to each other makes up a significant portion of the $100 billion the global auto industry spends on research and development, a study last month by the Center for Automotive Research, or CAR, found.

Ford executive chairman Bill Ford, great-grandson of founder Henry Ford, in 2009 formed Fontinalis Partners to invest in mobility technology such as bike-sharing service Zagster and ParkMe parking-assistance software.

“We’re going to have these megacities and they are going to have lots of infrastructure issues, not just transportation, but clean water and food distribution,” Ford said in a July 2011 interview, outlining issues the Dearborn, Mich.-based company said this month it’s continuing to examine. “If you look at every auto company’s business plan and extrapolate it out over the next 10 years, it certainly didn’t take me long to start asking the question: Where will all those cars and trucks go?”

One answer: For every vehicle that is used in a car-sharing fleet, automakers will lose 32 vehicle sales, a study by AlixPartners concluded.

The Southfield-based consulting firm, which advised GM on its bankruptcy, estimates car-sharing has cost makers 500,000 vehicle purchases since 2006. Self-driving “autonomous” cars will be the “killer app” that enables car-sharing companies to blossom, AlixPartners said. By 2020, it said, four million Americans will car-share, up from 1 million now.

That coming boom in autonomous cars has created an opening for technology companies that view mobility differently than automakers do. Google Inc. has logged hundreds of thousands of miles road-testing its own driverless cars, CAR says.

“The auto manufacturers may need to have a different generation of senior executives and CEOs because today’s generation gets more excited about the sheet metal of a production car versus the bits and bytes,” Gartner’s Koslowski said. “If the industry doesn’t work fast enough, the Googles and Apples of the world will fill the void.”


— Washington Post-Bloomberg

Report Error Submit a Tip


Advertise With Us