Ford has reported an uptick in sales despite current industry trends of uncertainty. While the auto industry has shown signs of recovery since the government bailouts, experts believe that car ownership may have peaked in wealthy countries like the US. Long-term factors like high fuel/insurance costs, increased urbanization, and changing social trends among youth suggest that both car ownership levels and miles driven will not continue to grow at historical rates and may start to decline.

1. America
FORD’S FOCUS Despite current trends,
Ford, which did not accept bailout funds, has
reported an uptick in sales. But the industry
as a whole is facing uncertainty.
Putting the Brakes
on Car Ownership
The economy and cultural factors may brought the automakers back from the brink of collapse.
But there’s growing evidence that such claims are a stretch,
herald the end of America’s love affair at best.
with the automobile. In fact, many economic and auto industry experts point
to signs that car ownership is leveling off in the United
States and other affluent nations as a result of the reces-
sion, broad demographic changes, and cultural factors.
A
b y n i c k tat e
t the democratic national convention, As a result, the heyday of car ownership — as depicted in
President Barack Obama trumpeted his admin- Bruce Springsteen’s mid-1970s anthems and popular films
istration’s efforts like American Graffiti — has been
to put the U.S. auto NEW VEHICLE SALES IN MILLIONS left in the dust.
industry “back on top of the The implications for the U.S.
20
world,” echoing his campaign’s economy and employment out-
FORD/AP IMAGES / ICONS/ISTOCKPHOTO
signature slogan: “Bin Laden is 16-17 15 look, not to mention the political
dead and GM is alive.” world, are significant. U.S. auto
10
“The American auto industry jobs and sales have seen resur-
has come roaring back,” Obama 9 5 gence in the past two years, and
said, five years after the gov- many believe the federal govern-
0
ernment’s $80 billion bailout of BEFORE 2009 2009 ment’s bailout of GM and Chrys-
General Motors and Chrysler ler provided an important lifeline.
SOURCE: Moody’s Analytics
24 N E W S M A X | N OVE M B E R 2012

2. Still, longer-term factors suggest both car ownership and
the number of miles being driven have reached a peak — or
is close to it — and may even be waning in the U.S. and the
world’s richest nations. And that could have wider impacts
that extend far beyond America’s historic love affair with
the car.
“I don’t think we’ve necessarily hit the peak for car
ownership . . . in the rich world, including the United
States,” Lacey Plache, chief economist at Edmunds.com,
tells Newsmax. “But are we going to continue growing at
the rate we’ve been growing in the past? That’s a question
MASS MIGRATION More people are turning to mass
we just can’t answer.” transportation as vehicle ownership loses its luster due to
Plache noted younger Americans are getting their many factors including skyrocketing fuel and driving costs.
licenses later and older
Longer-term Americans are driving
less than in years past. What’s Driving the Trend
factors suggest In addition, Americans Here are some of the particulars behind the downturn:
both car are keeping their cars
longer than ever, sug- The Great Recession: Car ownership and miles traveled
ownership and gesting a new frugality steadily rose from the 1950s, but began to plateau in 2004
and fell in 2007 before the most recent recession sent auto
the number has taken hold.
According to the
sales plunging. A recent study for the Australian government
of miles being research firm R.L.
suggested that 20 countries in the rich world show a
“saturating trend” in vehicle-miles traveled.
driven have Polk, about 242.1 mil-
lion light vehicles were
Fuel, Driving Costs: Gas prices have soared in recent
years, as have auto insurance premiums for younger drivers.
reached a peak. in operation in the City Living: In urban centers, car ownership is declining
United States in 2008. and mass transit ridership is soaring. According to the
That figure dropped to 240 million in 2010, rising slightly Organisation for Economic Cooperation and Development,
to 240.5 million last year. 77 percent of the population in developed nations lives
At the same time, new vehicle sales were running about in urban areas — a figure projected to rise. In the U.S., the
16-17 million per year before the recession, according to number of city dwellers without a car has grown since the
Moody’s Analytics, in part because of easy access to credit.
1990s, to about 13 percent, more than twice the percentage
of people living in rural areas who don’t have a car.
Sales bottomed out in 2009, with just 9 million new cars
Age-Related Factors: Younger generations of drivers are
sold. Since then, new car sales have been inching up, but
getting their licenses later than ever, according to a recent
only slightly. study out of the University of Michigan. The proportion of
“People bought more cars than they really needed before young households without cars rose from 20 percent to 28
the recession,” noted Sophia Koropeckyj, an auto analyst percent between 1998 and 2008. What’s more, Americans
and economist with Moody’s. “Some families had three ages 16 to 34 have increased their use of mass transportation
family cars, sometimes there were more cars than there by a whopping 100 percent from 2001 to 2009, according to
were adults in the households.” the Frontier Group.
In the United States more than 8 million people now Social Changes: Young Americans, like their
work in manufacturing and services related to automo- counterparts globally, have turned to the Internet for social
biles (about 4.5 percent of private-sector employment). But
interaction, entertainment, and shopping — replacing the
need for many car trips. The Economist magazine recently
automobile employment on the whole has been in decline
cited a survey by the consulting group TNS that found
since 2000 and is now about half of what it was 12 years ago,
young people increasingly view cars as appliances, not
according to Moody’s. aspirations, and say that social media gives them access to
Despite these trends, Plache, Koropeckyj and other their world that once would have been associated with cars.
experts say it is premature to suggest America’s reliance The magazine also noted that “the buzz, status, and implicit
on automobiles is at a dead end — even if the road back sexuality of car ownership has been displaced by other
AP IMAGES
for the auto industry will be bumpier than President products and lifestyles.”
Obama suggested.
N OV E M B E R 2012 | N E W S M A X 25