peak-car-1In what year will the number of cars in the world reach its peak and auto sales overall begin to decline?

For most, it may be surprising to realize we’re already there in the U.S. Growing data shows many wealthy economies have already hit “peak car,” a point of market saturation characterized by an unprecedented deceleration in the growth of car ownership, total miles driven, and annual sales.

Vehicle traffic grew at a staggering rate worldwide for decades. But that all changed in 2007. Some refer to it as the perfect storm with the combination of economic collapse, digital revolution, and major shifts in urban lifestyles.

Several alternative transportation startups also began in that timeframe led by the likes of Zipcar, Uber, Lyft, and SideCar. This was followed by the emergence of connected cars, growing electric vehicle markets, driverless cars, declining birthrates, and increasingly congested highways in virtually every major city in the world.

Mounting indicators are painting a clear picture of an automobile industry only a few years away from reaching the top of the bell curve in the rest of the world as well.

Even though the continent of Africa with its high birthrates and under developed infrastructure is a long ways from reaching its automotive peak, today’s wholesale shift in transportation thinking has caused alarm bells to ring throughout the entire automotive industry.

So how will this transformation play out?

In just a decade or so, owning a car may well be relegated to the hobbyist, luxury market, much like owning airplanes or horses today.

Relying on a personal vehicle, with personal responsibility for finance charges, licensing, taxes, repair costs, insurance, gas, oil changes, cleaning, and complying with 10,000 laws about parking, speeding, noise, pollution, stop signs, stop lights, and construction zones will soon be a thing of the past.

In fact, owning a car has become a painful experience. From the salespeople who sell you the car, to the finance guys in the background, to the cops watching your every move, it’s easy for car buyers to feel like tiny rodents with swarms of vultures circling overhead.

With a history of scam artists and con men leaving their indelible mark, the auto sales industry has begun a slow march towards is being regulated out of existence.

People have put up with it because they didn’t have any other good options. But new options are already here and more are on their way.

In the U.S. "peak car" happened in June 2005
In the U.S. “peak car” happened in June 2005

Shifting from “Just-in-Case” to “Just-in-Time”

On a recent trip to Australia I was shown a house that was owned by Elton John. He owned it for 12 years but only showed up there once.

In the past, rich people were always defined by how much they owned. Real estate, expensive cars, vacation homes, and fancy jewelry have long been the symbols of greatness.

But today’s young people think about it differently. Our physical trappings weigh us down. They occupy our mind, cloud our judgment, and consume our time. Our possessions become our obsessions.

No, the world of physical ownership will not abruptly end over night. But the speed with which we begin to migrate in that direction is about to pick up.

We own a car just-in-case we need to go somewhere. But what if there were other options?

Today 144 million Americans spend an average of 52 minutes a day in their car, most of it spent commuting to and from work. In the future, we will not show up for work just-in-case we need to be there. Rather, we will figure out schemes for being there just-in-time, either virtually or physically, as the needs of business dictate.

On-demand transportation, anywhere, any time
On-demand transportation, anywhere, any time

On-Demand Transportation

If the average non-productive time spent in cars were eliminated, how else could commuters spend their extra 52 minutes a day?

Imagine stepping out of your house 10 years from now and using your smartphone to summon a driverless vehicle. Within 2-3 minutes a driverless vehicle arrives and whisks you off to work, school, shopping, or wherever you want to go.

On-demand transportation is already happening with companies like Uber and Lyft. If we eliminate the driver, costs will plummet.

According to Lux Research, by 2030, the self-driving car market will grow to over $87 billion.

Once the technology is perfected, on-demand transportation companies will crop up in most metropolitan areas with large fleets of vehicles poised to meet consumer demand.

It’s at this point where car companies will begin changing their business model, and rather than charging for each vehicle sold, they will partner with fleet managers and charge for every mile the car is driven.

The New Industry Model

Today, auto manufacturers are incentivized to sell cars, and the more cars the better. Well, it’s better for them but not better for the cities and countries that have to deal with the deluge of cars.

Car companies will continue to sell cars until cities become dysfunctional, and we are seeing this play out all over the world. Most municipalities are ill equipped to build the necessary infrastructure to accommodate the rapidly growing number of cars.

My sense is that in an on-demand transportation world, car companies will be paid for every mile they’re driven, so they will begin focusing more on durable vehicles, capable of traveling a million miles or more. Fewer vehicles, that are capable of lasting far longer, will equate to a much more profitable car company.

At the same time, fleet operators faced with purchasing 10,000 vehicles at a time will be a vastly different consumer than today’s personal-use car buyer. Operational efficiency and repair records will be the primary considerations, and with large numbers of vehicles involved in each purchase, they will push had for the lowest possible price.

Since most people will no longer own their own cars, far less attention will be paid to things like style, color, branding, and status.

The losers in this emerging world will be insurance and finance companies, and all the dealerships dependent on sales. At the same time, traffic cops and traffic courts will go away along with all the lawyers, judges, parking lots, junk yards, taxi and limo services, and thousands of other tiny businesses supporting our current human-centric driving world.

Entering the driverless car era
Entering the driverless car era

Final Thoughts

We will very likely reach “peak car” for the world sometime over the next ten years.

Even though the auto industry has been glacially slow at adapting to change in the past, the on-demand transportation shift will happen quickly, meaning years instead of decades.

Policy-makers will find it far easier to regulate a few large fleet companies than millions of individuals. Noise, pollution, drunken driving, car related deaths and injuries will all become a thing of the past.

City planners will begin working on an entirely new era of infrastructure as driverless highways and driverless mass transit will require far different standards.

Most consumers will welcome the change as it frees up their time and money for more important uses.

As always, there are many things that can go wrong along the way. Hackers causing cars to crash into each other, unions preventing some states from allowing driverless cars, protests by people losing their jobs, or driverless cars being used in some terrorist plots are all potential threats to this scenario.

The path of progress is never smooth, so expect many things to go wrong along the way.

However, I see “peak car” as a very positive development. But I’d love to hear what you think. Is this a good thing? Will we all be using driverless cars within the coming decade? Will “peak car” happen in the next ten years, and if not, why not?

By Futurist Thomas Frey

Author of “Communicating with the Future” – the book that changes everything

FutureForecasting

9 Responses to “The Coming of “Peak Car””

Comments List

  1. <a href='http://pgsundling.com' rel='external nofollow' class='url'>P.G. Sundling</a>

    Every time I see one of these posts about something I've been thinking about too, it's like a little push to get my book "None of the Above" done. I'm a big believer in the collective unconscious. The sharing economy and the tech industry invading other industries will have large repercussions. Thank you Google and Elon Musk for helping push the future. Thank you Thomas Frey for explaining things clearly for the others that aren't already aware of such things.
    Reply
  2. <a href='http://1savingenergy.com' rel='external nofollow' class='url'>Scott Wetteland</a>

    Great article!! Very well written and enjoyed the eye opening experience. It will be much more sustainable than our current transportation model. Scott W
    Reply
  3. <a href='http://Www.billpottle.com' rel='external nofollow' class='url'>Bill</a>

    Great article- one thing you didn't mention is the environmental benefits and the fact that driverless cars will be electric. Electric cars are more expensive up front but less expensive per mile. In this scenario there will be few cars constantly being driven. Range is also no longer a problem as a car can take a quick trip to the central hub to swap out a battery or on a long trip the whole car can change, similar to the old pony express algorithm
    Reply
  4. <a href='http://Website' rel='external nofollow' class='url'>Osnat</a>

    Always inspirational! At what point will we see a real effort to build public transportation infrastructure outside urban centers such as rural communities and outer city travel? I do not own a car so it has always been my choice to live in cities with public transport service, yet going out of town is a big effort. At least in the US the rail service for people is on a rapid decline and air travel is not an option for really out of the way places. Stretching this vision to 3rd world regions, even if by 2050 80% of world population will live in mega urban centers, this vehicular autonomy might take quite a bit longer to integrate. Well said about 'dark' use of this technology as well as drone technology.
    Reply
  5. <a href='http://Website' rel='external nofollow' class='url'>BSG</a>

    So many moving pieces...and so many good points that you bring up. I work for a tier one OEM (and aftermarket) automotive supplier and I can't help but wonder if the leadership here has thought about the impacts that some new technologies will have (I don't believe most people in leadership in large companies care about anything beyond about seven years). But based on what my company supplies, even the advent of electrically powered cars (battery, hydrogen, etc) will have a significant and most likely detrimental impact on our business. And while long-distance ground/road based travel will still need to exist as some readers have commented on, I believe the "rental" model will be the dominant method of obtaining that transportation. Of course the next question is how many people will actually have the driving skills to drive a car that doesn't drive itself...or maybe everything will be self-driving at that point? To bad that I'll probably be dead before most of this is realized...
    Reply
  6. <a href='http://Website' rel='external nofollow' class='url'>Karl Horst (Germany)</a>

    Hallo Thomas, Thank you for a very good article! This topic is of particular interest here in Europe. Germany, and most of Europe, has enjoyed public transportation in the form of rail, light rail and buses for over 100 years. It is efficient, available and affordable and has provided a means for the average citizen to get from Frankfurt to Paris (or anywhere else in Europe) without the need for a car. Because gasoline is heavily taxed here in Europe, it is very expensive (1.50€/liter or around $6.00/gallon) so few Europeans own more than one car per family. Because of the higher cost of fuel and taxes on larger engines, the average European car owner favors a 2-liter or smaller engine. The "soccer mom" SUV simply doesn't exist here and no one would seriously consider anything the size of a Chevy Suburban or Dodge Ram pick up truck. Since travel distances for Germans are much shorter than those of the average American commuter, we really don't need a car to get to work or the stores. Cars, as you indicated, are somewhat of a luxury, not a necessity. Germans typically live within 20km of their workplace so the idea of an hour long commutes by car is unthinkable. The problem we have run into with peak traffic has only really emerged since the old East Bloc countries (Slovenia, Romania, Poland, Czech, etc.) joined the EU after the Berlin Wall came down. Now the flood of trucks from these countries is overwhelming German (and French) highway systems. In Germany, and most of Europe, our autobahns and highways are primarily two lane highways and were purpose built for high speeds, not volume. With limited land availability, expanding our highways from two to three lanes is always a question of the environment vs. traffic efficiency. Switzerland has implemented a solution to minimize truck traffic through their small country; overland trucks on rail. Trucks are loaded at the border onto rail cars and pass through the country by night. This reduces emissions, makes for a quieter environment with no impact on the existing infrastructure. Also the truck drivers can enjoy a nice sleep while en route. Pretty clever those Swiss! For Europeans, the argument can be made against electric vehicles for several reasons. First, the disposal of the batteries is a big concern, as is the environmental demand for the rare earth materials required to produce them. Second, since we don't have the benefit of 365 days of sunshine, solar and wind power contribute less than 10% to the grid. Therefore gas fueled power plants will have to generate even more power to provide electricity to power these vehicles. Remember, energy in any form, is not free. Short term solutions to peak traffic for Germany would be to continue to expand services for existing rail and bus systems, implement the Swiss rail system for trucks passing across Germany and to expand our primary highways from two-lanes to three. As European cities continue to grow, and rural towns decline, mega cities may well be the future and cars may also go the way of the horse and buggy so the problem of peak traffic may solve itself. Grüße, Karl
    Reply
  7. <a href='http://www.facebook.com/profile.php?id=100003469590735' rel='external nofollow' class='url'>Mariela</a>

    Can the industry even solve raotleugry issues by 2020? Google recently convinced the Nevada legislature to allow driverless vehicles, but the industry will have to go state by state and get federal approval from the DOT and ICC as well. That doesn't seem like an 8 year project.
    Reply
  8. <a href='http://Website' rel='external nofollow' class='url'>Jammer</a>

    I have known this for some time. I tell people 90% of the cars are parked and once we automate cars and use 'Just in time' we can get rid of that 90% and regain our roads and cities. We will have much more usable city space. Hurry up!
    Reply
  9. Colin Hicks

    Excellent anaylyis; "peak car" is now. It's hard to believe a 1870 invention (combustible engine) will have any future in the 22nd Cen or beyond. Most people can't afford cars; automated driverless cars can offer a very bright future. Roads are such old archaic infrastructure pioneered by the Romans and take up 30%+ of city real estate . We live in exponential x's (times); new world wide web infrastructure awaits us in the future.
    Reply

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