Is ‘Peak Car’ Really A Thing?
The experts are predicting it. But what does it mean for your dealership?
If someone had told you a decade ago that huge numbers of urbanites would one day abandon car ownership in favor of affordable, easily-accessed rides they flagged down on their smartphones, you might rightly sound skeptical.
But with more potential auto buyers seeking alternate methods of getting around — from ridesharing to scooters — this exact scenario is starting to be discussed at the highest levels.
In fact, writers at Bloomberg Businessweek recently declared that we could also be on the verge of “peak car” — a key tipping point at which auto sales hit an all-time apex before making a swift descent.
“This is especially true in big cities where people are becoming more inclined to share rather than own a vehicle that sits idle most of the time,” reads one of the Bloomberg articles dedicated to the topic.
The article ominously noted that the number of driver’s license-holders under the age of 25 has slid precipitously in the past decade — 28 percent in Germany alone.
Even with some 1.3 billion cars on the road around the planet, and annual sales of nearly 95 million vehicles, many believe stats like these prove that current alternatives to the automobile have signaled the beginning of the end for the global auto business.
But is this idea grounded in reality? Or is it totally overblown?
Is It Time To Freak Out Yet?
Make no mistake, a good number of people are swearing off car ownership for a variety of reasons — lending credence to the “peak car” notion.
“I would never go back to owning a car,” marketing CEO Larry Kim told Bloomberg, lamenting the hour a day he used to lose just shoveling his car out of Boston snowstorms. “Your time is not free, right? Your time is worth more than $20 an hour. So in my case, why not spend $15,000 to $20,000 a year to get all of that time saved?”
Kim is certainly not alone. According to McKinsey & Company, almost 50 percent of revenues in the mobility industry could come from alternatives besides traditional opportunities, such as automobile ownership and taxi use, by 2030.
And while it’s the kind of stat tailor-made to drive fear into the heart of any dealer, a lot still has to play out for such a drastic jolt to the auto business to be a reality, said Jake McKenzie, content manager with Auto Accessories Garage.
“We may well be at peak vehicle production, but much of the nation’s infrastructure is built for car owners and the drop will likely not be as dramatic as some predict,” McKenzie says. “More likely, a very gradual decline in vehicle ownership will be evident over a period of several decades. Still, this would rely on truly autonomous vehicles coming into place.”
Certainly, manufacturers from Kia to Volvo are aggressively adapting their vehicles to integrate the earliest stages of self-driving technology, but a world of entirely self-driving cars is still likely decades away — meaning there’s still a lot of mileage left in the business of selling cars to human drivers.
Ridesharing And Sales Don’t Cancel Each Other Out
Even the continuing growth of mobility alternatives like Uber aren’t an automatic death knell for the car industry. After all, someone still has to sell all those rideshare vehicles — even if dealers may have to adjust how they do that.
“Ridesharing does change consumer expectations of car dealerships,” says Laura Gonzales, marketing manager at Washington’s Audi Spokane. “The generation of ridesharers want personalization and transparency, and if dealerships can’t accommodate these needs, they will be left behind.”
Gonzales suggests something as simple as allowing online reviews — while carefully monitoring and thoughtfully responding to those reviews — to help instill confidence in a sales-averse generation of potential buyers.
“Personalizing is also extremely important,” Gonzales adds. “Ridesharers get to select their drivers, so dealerships should make personalized recommendations based on what the customer is looking for, versus strictly trying to be a salesperson.”
Flexibility is Key
Harry Campbell, an Uber driver, blogger and YouTube expert known as The Rideshare Guy, says dealers may also want to partner with a company that provides a direct pipeline of customers who want simplified access to affordable, passenger-friendly vehicles, right in their own communities.
“Automobile businesses need to adapt with flexible options that don’t lock consumers into car ownership, leases or other traditional auto products,” Campbell says.
Taking a big-picture view, Campbell also says he hopes carmakers begin to recognize and respond to the continued growth of the rideshare business, providing vehicle options or partnership programs directly catering to rideshare customers.
“The smart ones may want to consider actually designing vehicles for rideshare drivers, to endear brand loyalty,” he said. “Right now, rideshare customers have no say in what type of car they’re getting into, but in the future there will be an opportunity for them to call an Uber and request a specific brand, like Tesla or Toyota.”
And Don’t Forget the Auto Enthusiasts
While ridesharing and other auto alternatives are great for folks in urban areas, there’s a whole lot of America that still relies on private vehicles — and will continue to do so for a long time. To them and the millions of existing drivers and enthusiasts who see their cars as more than mere appliances for a daily commute, the death of the private automobile still seems like a far-off notion, as cars still mean something more important than basic transportation.
“Cars have been around for over a hundred years, and the cars from the past are still around, being worked on and being driven,” says Halle Williams, whose family runs Justified Performance, a metal fabricator and custom hot-rod company in Roseville, Calif.
“Having a passion for classic cars is a lot different than other hobbies people are passionate about, Williams said. “People are willing to spend the money on their cars because of a deeper personal connection that so many people have with their classic rides. The private car is not just a love affair; the connection and pride people have with their cars is here to stay.”
