Has the United States reached “peak car”? It was once nearly unthinkable, given the love that Americans have for their vehicles. Many analysts, however, believe that it’s not only possible, but that we’ve already passed the point.
In short, “peak car” refers to the theory that motor vehicle distance traveled per capita, mostly by private car, has peaked – if not forever, but nearly forever — and will now fall in a sustained manner. Consider some of these statistics raised by Business Insider and others:
- Analysts from Nomumra are predicting that global demand for cars will decline three percent in 2019.
- There have been at least 38,000 job losses among automakers in the past six months.
- Commercial vehicle exports from the UK collapsed by 89 percent in April.
- The decline in car sales has already wiped 0.2 percent off global gross domestic product, says Fitch Ratings.
- New-car sales at General Motors fell for the third year in a row in 2018 — to 2.95 million vehicles, a decline of nearly 50,000 from 2017. Ford sales also went down, with 2.48 million sold in 2018, down 9,000 from the previous year.
- S. light vehicle sales will likely come in below 17 million units by the end of 2019, which would mark the first time that’s happened since 2014.
- The sharpest declines have been seen by the ultra-luxury brands such as Lamborghini and Aston Martin and Rolls Royce, according to USA Today.
Millennial Americans appear to be one of the first generations to forge ahead without necessarily adding vehicle ownership to their “adulting” portfolios. Thanks to car sharing, ride hailing apps such as Uber and Lyft and temporary car solutions such as Zipcar, younger Americans are finding they can pay for only what car they use. Simply put, they can’t afford new cars, in part because of the crippling amount of student debt many of them are carrying. It hasn’t been hard for analysts to put together a grim picture.
“The industry is right now staring down the barrel of what we think is going to be a significant downturn,” said Bank of America’s John Murphy at a conference last week.
Then there’s the used car market, which is booming, even among Americans formerly considered to be reliable for buying new cars: that is, prime credit customers. With the historic rise in new vehicle prices, these reliable customers have stopped being quite so reliable.
“In our view, the fact that the most qualified consumers are increasingly gravitating toward used vehicles is a potential red flag for automakers who continue to push the limits of consumer affordability,” Garrett Nelson, the author of a study by CFRA Research, told Business Insider.
In other words, we may already have passed “peak car” while automakers have been busy scrambling to be sure they have a seat at the electric vehicle party that may (or may not) be coming.