Have we really hit “Peak Car”?

January 24, 2014 at 5:56 am CST

Have we reached ” peak car “?

It’s a great question and one that impacts how we build our cities and their suburbs, how we allocate transportation funding at all levels of government, how we shop, and how we live. For the last year or so many news accounts have cited the research of Michael Sivak at the University of Michigan Transportation Research Institute and declared unequivocally that we have indeed reached “peak car,” meaning that we hit the maxima for the rate of car ownership, the miles driven and the fuel consumed. More importantly, those maxima were hit, according to his research, before the recession hit.

This much we know about today: The proportion of households that own a car nationwide has declined.

Now we need to ask where and why, which can lead us to questioning: Will these trends last?

First, some caveats that are either explicit or implicit in the U of M research:

The research is focused on the proportion of households that don’t own a car. The report says that as the number of households in the U.S. continues to rise – more on that later – the actual total number of vehicles out there will likely continue to rise. All that needs to happen is for the rate of new households created (formation) to exceed the rate of decline in the proportion of ownership and we will never reach “peak” cars. Simple math.

In looking at city-level trends, there’s huge variance. “The proportion of households without a vehicle varies approximately 10-fold among the 30 largest U.S. cities. In 2012, the maximum was in New York (56.5 percent) and the minimum in San Jose (5.8 percent).”

The city-level trends are just that: city-level. The research didn’t examine metro areas, which would include the more car-centric suburbs, and where most of the absolute population growth is taking place.

The proportion of car ownership increased in nine out of the 30 largest cities including Dallas, Houston, San Diego and Denver.

Part three of the four-part study says, “because the changes in the rates from 2008 on likely reflect both the relevant societal changes and the current economic downturn, whether the recent maxima in the rates will represent long-term peaks as well will be determined by the extent to which the relevant societal changes turn out to be permanent.”

That last one is a big disclaimer and one that hints at a discussion of what is causing these changes. In my book on demographic and consumer trends , I talk about four reasons for the declining in driving: the economy, changes in 20-somethings’ preferences for public transportation and sharing, competition from non-driving activities like the Internet, and changes in Graduated Driver’s License laws that make it more difficult to get and restrict early use of a license for teens.

None of those things are really going away. But let’s look a little deeper. What are some demographic reasons that people wouldn’t buy cars? For that, I’d want to look at some social and economic factors.

The U of M research looks at the proportion of households that own a car (or light truck, but I’m going to talk about them together for simplicity’s sake). The make-up of households and the rate at which they are formed have gone through significant changes. Single-person households now account for 28 percent of all households. Married couples with kids have fallen below 20 percent, and married couples have dipped below 50 percent for the first time ever. Single-person households often can be found in big cities and dense areas where public transportation, or at least easy access to amenities and workplaces, make having a car less necessary.

Source: U.S. Census Bureau Current Population Survey

Here’s why I don’t think we’ve necessarily hit peak car. For one thing, as you can see in the chart above, there is a huge pent-up demand for households . In other words, households have formed at below-average rates even in years before the recession. As today’s 20-somethings, who have been stuck living with their parents and others in record numbers, form their own households, they will no longer have access to mom and dad’s cars and could likely need to get their own. Second, 12,000 or so 20-somethings are turning 30 each day. The clock is ticking on their delayed life-stages (getting married and having kids later). Sooner or sooner they’re going to start having more kids, and kids tend to need cars to schlep them around in.

In economic concerns, 22.6 percent of kids under age 18 now live in poverty, up from 18.5 percent in 2005. So that could point to a decline in likely car buyers, but as that rate (hopefully) falls as we come out of the recession, that could also indicate pent-up demand. Similarly, unemployment is falling and as more people have jobs, more people will have money for and a need to drive cars.

There are certainly other factors to consider as well. If we consider 16-25-year-olds to be a large and important target market for unmet car-buying potential: where do they live and what are their demographics? Gary Painter, a professor at University of Southern California, has produced some fascinating research about how household formation changes during a recession . He found that the rate at which people form households and whether they rent or own varies greatly based on race and ethnicity, gender, the wealth of the parents and whether they are immigrants or native-born.

Arguably, hitting peak car would be great for the planet and lead to more compact, more livable and more sustainable cities. We just might not be there yet. The demographic trends that underlie what’s going on with driving certainly leave enough room for debate and further study. What do you think? Have we hit peak car yet?

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