Youth Losing Interest in Cars & US Car Fleet Slumped by 4 Million in 2009

The recession continues to deliver green
Posted: 06 Jan 2010

by Lester R. Brown

America's century-old love affair with the automobile may be coming to an??end. The US fleet has apparently peaked and started to decline. In 2009,??the 14 million cars scrapped exceeded the 10 million new cars sold,??shrinking the US fleet by 4 million, or nearly 2 per cent in one year.??While this is widely associated with the recession, it is in fact caused by??several converging forces.

Future US fleet size will be determined by the relationship between two??trends: new car sales and cars scrapped. Cars scrapped exceeded new car??sales in 2009 for the first time since World War II, shrinking the US??vehicle fleet from the all-time high of 250 million to 246 million. It now??appears that this new trend of scrappage exceeding sales could continue??through at least 2020.

Among the trends that are keeping sales well below the annual figure of??15-17 million that prevailed from 1994 through 2007 are market saturation,??ongoing urbanization, economic uncertainty, oil insecurity, rising gasoline??prices, frustration with traffic congestion, mounting concerns about??climate change, and a declining interest in cars among young people.

Market saturation may be the dominant contributor to the peaking of the US??fleet. The United States now has 246 million registered motor vehicles and??209 million licensed drivers -nearly 5 vehicles for every 4 drivers. When??is enough enough?

Following Japan

Japan may offer some clues to the US future. Both more densely populated??and highly urbanized than the United States, Japan apparently reached car??saturation in 1990. Since then its annual car sales have shrunk by 21??percent. The United States appears set to follow suit.

The car promised mobility, and in a largely rural United States it
delivered. But with four out of five Americans now living in cities, the
growth in urban car numbers at some point provides just the opposite:??immobility. The Texas Transportation Institute reports that U.S. congestion??costs, including fuel wasted and time lost, climbed from $17 billion in??1982 to $87 billion in 2007.

Mayors across the country are waging a strong fight to save their cities??from cars, trying to reduce traffic congestion and air pollution. Many are??using a "carrot-and-stick" approach to reduce costly traffic congestion by??simultaneously improving public transportation while imposing restrictions??on the use of cars.

Almost every US city is either introducing new light rail lines, new subway??lines, or express bus lines, or they are expanding and improving existing??public transit systems in order to reduce dependence on cars. Among the??cities following this path are Phoenix, Seattle, Houston, Nashville, and??Washington, D.C. As urban transit systems expand and improve, commuters are
turning to public transit as driving costs rise. Between 2005 and 2008,??transit ridership climbed 9 per cent in the United States. Many cities ar??also actively creating pedestrian and bicycle-friendly streets, making it??easier to walk or bike to work.

Parking fees

Forward-looking cities are also reconsidering parking requirements for new??buildings. Washington, D.C., for example, has rewritten its 50-year-old??codes, reducing the number of parking spaces required with the construction??of both commercial and residential buildings. Earlier codes that once??required four parking spaces for every 1,000 square feet of retail space??now require only one.

As parking fees rise, many cities are moving beyond coin-fed parking meters??and replacing them with meters that use credit cards. The nation's capital??is making this shift in early 2010 as it raises street parking fees from??75?? to $2 per hour.

Economic uncertainty makes some consumers reluctant to undertake the??long-term debt associated with buying new cars. In tight economic??circumstances, families are living with two cars instead of three, or one??car instead of two. Some are dispensing with the car altogether. In??Washington, D.C., with a well-developed transit system, only 63 per cent of??households own a car.

A more specific uncertainty is the future price of gasoline. Now that
motorists know that gas prices can climb to $4 a gallon, they worry that it??could go even higher in the future. Drivers are fully aware that much of??the world's oil comes from the politically volatile Middle East.

Young people|

Perhaps the most fundamental social trend affecting the future of the
automobile is the declining interest in cars among young people. For those??who grew up a half-century ago in a country that was still heavily rural,??getting a driver's license and a car or a pickup was a rite of passage.??Getting other teenagers into a car and driving around was a popular??pastime.

In contrast, many of today's young people living in a more urban society??learn to live without cars. They socialize on the Internet and on smart??phones, not in cars. Many do not even bother to get a driver's license.??This helps explain why, despite the largest US teenage population ever, the??number of teenagers with licenses, which peaked at 12 million in 1978, is??now under 10 million. If this trend continues, the number of potential??young car-buyers will continue to decline.

Beyond their declining interest in cars, young people are facing a
financial squeeze. Real incomes among a large segment of society are no??longer increasing. College graduates already saddled with college loan debt??may find it difficult to get the credit to buy a car. Young job market??entrants are often more interested in getting health insurance than in??buying a car.

Less pollution

No one knows how many cars will be sold in the years ahead, but given the??many forces at work, US vehicle sales may never again reach the 17 million??that were sold each year between 1999 and 2007. Sales seem more likely to??remain between 10 million and 14 million per year.

Scrappage rates are easier to project. If we assume an auto life expectancy??of 15 years, scrappage rates will lag new sales by 15 years. This means??that the cars sold in the earliest of the elevated sales years of 15-17??million vehicles from 1994 through 2007 are just now reaching retirement??age. Even though newer cars are more durable than earlier models, and may??thus stay on the road somewhat longer on average, scrappage rates seem??likely to exceed new car sales through at least 2020. Given a decline of??1-2 percent a year in the fleet from 2009 through 2020, the U.S. fleet??could easily shrink by 10 percent (25 million), dropping from the 2008??fleet peak of 250 million to 225 million by 2020.

At the national level, shrinkage of the fleet combined with rising fuel
efficiency will reinforce the trend of declining oil use that has been
under way since 2007. This means reduced outlays for oil imports and thus??more capital retained to invest in job creation within the United States.??As people walk and bike more, it will mean less air pollution and fewer??respiratory illnesses, more exercise and less obesity. This in turn will??also reduce health care costs.

The coming shrinkage of the US car fleet also means that there will be??litte need to build new roads and highways. Fewer cars on the road reduces??highway and street maintenance costs and lessens demand for parking lots??and parking garages. It also sets the stage for greater investment in??public transit and high-speed intercity rail.

The United States is entering a new era, evolving from a car-dominated??transport system to one that is much more diversified. As this evolution??proceeds, it will affect virtually every facet of life.

Lester Brown is president of the Earth Policy Institute


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