The Future of Car Ownership

The number of cars per 1,000 people in the United States is 809. That is the highest of any large rich country in the world. By comparison, Canada is 607, Japan 588, Germany 582, and the U.K. 519. Depending on whose numbers you believe the number of vehicles per household in the U.S. is either slightly more or slightly less than two.

The automotive industry is the largest manufacturing sector in the country. It is the largest retail business. And it accounts for 4.5% of private sector employment in the U.S.

But there are many recent statistics that suggest that car ownership has peaked and may be on a downward slide. According to Advisor Perspectives, an investment research company, the number of miles driven in the U.S. peaked in 2005 and has declined every year since. There are other studies that show a decline in interest in owning cars or in even getting a driver’s license.

Not all of the stats are headed in that direction. Industry sources predict that car sales in 2015 will be 2.4% over last year. And in the developing world it appears that folks in Africa, Asia and Latin America are buying cars as soon as they can afford them.

What is particularly noteworthy is the apparent lack of interest in car culture among younger Americans. The consumer group US PIRG found that driving by young people (16-34) decreased 23% between 2001 and 2009 (Millennials in Motion). The AAA Foundation for Highway Safety reported that between 1996 and 2010 the percentage of high school seniors with drivers licenses dropped from 85% to 73%.

There are some compelling reasons why society at large might welcome a decline in car ownership. Transportation is the second largest producer (behind power plants) of gas emissions. Cars take up more space per person than any other form of transit. In 2013 (most recent DOT stats), 32,000 people died as a result of motor vehicle accidents. The Economist estimated that one rental car can take the place of 15 owned vehicles (Seeing the Back of the Car).

taxi cab

(unsplash)

But the reasons cited for what appears to be the beginning of a decline in car ownership are more personnel. The redevelopment of urban centers as attractive places to live, particularly for young people, makes car ownership both more expensive and less necessary. More young people socialize online and shop online. Most of us hate the traditional car buying process and we all hate traffic.

There are also some pretty substantive economic issues like the cost of vehicles, gas and insurance, the later being especially high for young drivers. For college graduates, the growth in student loans may have put the squeeze on other types of loans.  The rise of telecommuting has lessened the need for the car-based commute.

At this point what we are seeing is what has been termed “car peak.” But there are also some things on the horizon which could totally transform private car ownership: technology and the rise of the on-demand, sharing economy.

Automotive technology is clearly headed in the direction of the driverless car. A study by the University of Michigan Transportation Research Institute predicts that driverless cars would cut car ownership in half. Their conclusion is largely based on calculating the number of two-car and multi-car households that would no longer need more than one vehicle.

No more room

(kevinrosseel)

But even without the autonomous car, ride-sharing services like Uber and Lyft and car sharing services like Zipcar are beginning to raise questions about the value of owning your own car. For urban dwellers in particular, who in addition to car payments, insurance, maintenance and gas, also may have to pay a couple hundred dollars a month in garage fees, ownership is starting to look like a less-advantageous option.

By the end of last year, Uber said it was providing a million rides a day. Zipcar now has 900,000 members using 10,000 vehicles.

At some point these two developments, driverless cars and ride sharing services, will merge. If you can, with a couple of clicks on your phone. summon a driverless car that will show up in a couple minutes and economically take you wherever you’re going, it starts to look a lot better than bringing your own car in for an oil change every few months.

I am part of a two car family, despite the fact that neither my wife nor I drive to work. If I were to add up all the costs associated with these two cars and compare it to having one or both of us use a ride sharing service I’m not sure it would make sense. I’ve probably never gotten over the 17-year-old view, that an available car means freedom. Pretty soon I might have to think this through again.

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25 Responses to The Future of Car Ownership

  1. Thank you for this fantastic post, Ken. You have really done your homework!

    I, too, have noticed that more young people are not that interested in driving. Neither of my husband’s granddaughters have their driver’s licences and don’t seem interested in driving. They walk and talk public transportation whenever possible. If we all did that, we’d be much healthier, and so would the environment!

    Here’s hoping that the various options you have mentioned will encourage people to think of life without a car. We live in a rural area, so that is not possible at present for me, but perhaps sometime in the future …

    Liked by 1 person

  2. jacquiegum says:

    Wow! This is really kind of thought provoking. I live in a downtown area where parking can be a problem, So is hoofing it 10 blocks in spike heels:) So I find myself using Uber more. I wonder if there have been studies regarding the cost of an Uber-type service compared to owning a vehicle. As to the driverless cars, we still are faced with the same parking issues? I really didn’t know vehicle use was down and wonder how flying has contributed to that too. Like you, my car has always represented freedom… but then, so did my bike before I learned to drive:)

    Liked by 1 person

  3. Phoenicia says:

    Running a car is a big responsibility. Yes, it brings freedom to go and come as you please without having to plan your journey home. However, some young people would rather take public transport and take taxis if arriving home late at night.

    If living centrally, tubes run until early hours, some buses run 24 hours and taxis are affordable especially if three/four people pool together.

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  4. Erica says:

    I do miss living in NYC where nobody has a car. I seriously didn’t know one person who owned a car when I lived there. You basically have to own a car in Los Angeles. It is impossible to get anywhere without one. Perhaps if I start working full-time from my computer, I would consider getting rid of my car and relying on my husband’s. Until that point, I’m stuck with my wheels.

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  5. Tim says:

    The last car I actually owned was in 1986. Since then I have relied on public transport and it has not been a problem. I am happy with my carbon footprint; very small. That said though, I love road trips. Renting cars by the hour, day, or week is so much cheaper than owning one. With companies and non-profits like City Car Share and Zip Car there really is no reason to own any more if you live in an urban environment.

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  6. Have since 1986 lived, worked and integrated in leading cities all over the world. Have hence taken taxis, had chauffeurs drive me and, when necessary, rented a car since then. In other words, I started the trend of not having a car long before most people did. And will continue to live that way.

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  7. Sabrina Q. says:

    We used Uber in Florida on our recent trip for a last minute stop at a nearby mall and it was great. I can definitely see the appeal. Thanks for sharing the stats. I noticed in my area, people are not purchasing cars as much these days.

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  8. Although I love my Nissan Rogue and zipping around in it, if I could sell it and never own another car, I’d be good with that. Traveling in Washington, DC or anywhere in Europe it’s so easy to not use a car. Pittsburgh public transportation system is bad–like from the 1960s bag–but I’ll use it when I can to avoid driving downtown during any peak times.

    So a car = freedom? I totally agree with that from when I was a kid and lived out in the middle of no where. Freedom now means getting on a plane! HA. Although, real freedom now might mean owning jet! Now there’s an idea.

    Liked by 1 person

  9. Your post was very thought provoking. I live in a suburb where driving to any location is neccessary. When I happen to be visiting my brother is DC, even though he has a car, we often use Uber to get to various locations Driverless cars are intriguing. they leave me lots of questions, such as same parking, weather issues, other drivers etc. Like you, my car has always represented freedom to go and do as I like when I like. For me I don’t think it’s going away anytime soon. 🙂

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    • Ken Dowell says:

      As you can tell from the comments there is a big difference between living in a city and being in a suburb or rural area in the U.S. Once you’re outside the city limits our transit system won’t do much other than to get you back and forth to the city at rush hour.

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  10. It would be difficult to live in the Boise area without a car. Public transportation around here isn’t that great, but I am glad to hear car ownership is on a downward trend. My dad always had his everyday truck, a “fun” truck, and a “woodgetting” truck. Ugh.

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  11. lenie5860 says:

    Ken, i agree with the lack of interest young people show in getting their driver’s license. When I was young, as soon as a teenage boy (girls not so much) turned 16, they got their license and their daddy’s wheels. Now I know a number of people who don’t have or want a driver’s license.
    We live in a rural area and always needed two cars, at times even four when our two oldest boys had part-time jobs while going to school. Now we drive very little so are down to one car. Although I love driving, if I could store our car for the winter and call for transport I would do it in a minute.

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  12. I live in a two car family. We recently got rid of a third that was my grandfather’s (he lives with us) since he hasn’t been driving. We have to have multiple cars for the days our schedules are opposite with one kid sport here and another there.

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  13. I wonder if they compared car ownership to other vehicles? It seems I see more people using the modern mopeds, and three wheeled motorcycles now?
    If I could, I would ride a bike, or moped to work, but the roads and traffic do not allow it to be done safely.

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  14. Beth Niebuhr says:

    Isn’t it interesting that young people these days aren’t into cars? I suppose that’s good since they always have their eyes on their phones and their fingers too. I think it makes a lot of difference where people live as to how essential their cars are.

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  15. Ken, I have a 23 year old and a 17 year old both learning to drive now. Neither will own a car anytime soon. Between the bus that runs by our house (which in 18 years no one in our home has rode on), the subway 1/2 mile away (which I could take to work but don’t), the Zipcar station 1/4 mile away (which we do not belong to), Uber, Lift, (neither of which we have tried) and a plan to share my car that sits idle most of the time, we will stay a two-car family for the immediate future. That being said neither my wife nor I could imagine not having a car. A car means never having to say “can you pick me up/take me somewhere.” Besides we have to be a two-car family, Ann won’t let me drive her Jeep.

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  16. Andy says:

    I would argue that, regardless of where you live and regardless of what options may be available, it is better to have a driver’s license than to not have a driver’s license, in the same way that it is better to know how to cook than to not know how to cook. As a practical matter, driving is a skill that you should have under your belt for when you might need it.

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  17. Arleen says:

    I think as I am getting older I do not have the need to have a new car every year to two years. The prestige of a new car is no longer important. I see the same with my children and grandchildren.

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