Has the United States Hit Peak Cars?

We are in the midst of reviewing our plug-in electric vehicle forecasts, which means scouring data and news sources to get an understanding of how issues are playing out in the court of public opinion. It’s always the fun part of the job to learn what is “news” and what the public is talking about on forums and the like. One of the interesting trends that is getting more attention in the last year is a concept entitled “peak cars.” Over the years, we’ve heard a lot about peak oil, usually as an argument for electrification of the automobile, but now are we seeing peak in the number of cars in the United States?

Recently, the The New York Times had an article on European cities rejecting cars of any type. Many cities in the United States are also looking to remove cars from specific parts of the city whether that’s through tolls or turning roads into pedestrian avenues. Bill Ford, Executive Chairman of Ford Motor, recently spoke at a TED conference on the change to mobility that will have to include a variety of modes and connected cars. Even Detroit (aka Motor City) is updating our public transportation options.

It makes sense that at some point there will be just too many cars to physically fit within the finite space of a city (I realize this may strike Texans as a foreign concept, but ask anyone in Manhattan and they will know what I am talking about). The Earth Policy Institute argues that the United States has already hit peak cars and the decline is the result of a saturated market with five cars for every four drivers. A study by Lee Schipper and Adam Millard-Ball suggests that despite growing GDP per capita in developed nations, motorized travel peaked in 2003.

The question though remains what does this mean for the automotive industry? Leaving drivetrain aside for the moment, the challenge to an automobile company regardless of the energy source, is sales. If they don’t move metal, they don’t make money. Can big automotive companies still make money if we’ve seen peak sales in the United States at 17 or 18 million vehicles per year?

This is essentially a question of where the peak actually is and, perhaps more importantly, how far below peak is stable sales. To date, U.S. light duty vehicle (LDV) sales peaked in 2000 with 17.4 million vehicles (though 2006 was close with 17.1 million). The number of LDVs in the United States has continued to climb through 2008 (latest data available) with 238.4 million LDVs. So, while the sales of vehicles peak, that number does not necessarily represent the peak number of vehicles in the country.

There are a lot of pieces that come together attempting to calculate whether we have hit peak vehicles in the United States (global is a whole different ball of wax, so we will leave that for another day). With such a precipitous sales fall and climbing vehicle scrappage rates, it should not be surprising to see the overall fleet slip lower. The question is whether it will stay lower.

So what is driving the scrappage rates? Are these being driven by a more urban population that no longer needs vehicles or is it being driven by something else? While it’s not hard to imagine a small nation or a specific area hitting peak cars, what would it mean for automakers, if the majority of the United States has hit peak cars?

Article by Dave Hurst, appearing courtesy the Matter Network.

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