Car ownership is changing, not dying (yet)

On Monday, Business Insider published an article with the headline, “Uber and Lyft could destroy car ownership in major cities.” It’s a provocative headline, but it misrepresents the carefully worded findings of a recent study by researchers at the University of Michigan, Texas A&M and Columbia.

The study took shrewd advantage of a “natural experiment” that happened when Uber and Lyft, protesting new municipal legislation, stopped operating in Austin, Texas, in May of 2016. A few months later, the study authors surveyed a representative sample of Austin residents who had formerly used Lyft and Uber to see how their transportation habits had changed.

The most interesting findings from the study were that after Uber and Lyft drove out of town, 1) only 3% of respondents switched to public transportation (the technical term for this is “bad news”), and 2) that respondents who switched back to using a personal vehicle were 23% more likely to make more trips than when they’d used Lyft and Uber, increasing congestion for everybody else.

The study authors were careful not to extrapolate beyond the Austin city limits, so the Business Insider headline is overblown in its end-of-days rhetoric. It reminds me of the “Bring Out Your Dead” scene in Monty Python and the Holy Grail where a plague victim isn’t quite dead, but that situation is inconvenient for the person carrying him to a wagon full of corpses:

It’s not only fans of Lyft and Uber who overstate the impact of these services.

In an HBR interview, Nissan Renault CEO Carlos Ghosn — when asked about Uber and other such services cutting into car buying — replied, “I’m not worried. By our estimates, the industry sold 85 million cars worldwide in 2016 and is moving towards 87 million this year– both industry records.”

That is a nonsensical response: it’s like being confronted with a giant asteroid hurtling towards the Earth and replying, “but it’s so sunny outside!”

What’s really changing about transportation

In our work at the Center’s Future of Transportation project, we see a two-stage revolution in transportation that is just beginning.

In the first stage, what we call “Get-a-Ride Services” (or GARS) like Uber, Lyft, Car2Go, Zipcar and others make it thinkable for Americans to give up their own cars, but the move from just thinking about it actually to giving up a car is going to take time.

It’s a good news/bad news/more good news scenario.

We asked a representative sample of all Americans if they’d consider not having their own cars: 80% of respondents said no. That’s good news for car manufacturers– only 20% of Americans will let go of the steering wheel.

The bad news is that when we zoomed in on people who use GARS either frequently or sometimes that 20% consideration doubled to 40%– so use of GARS creates an immense flexibility in how Americans think about transportation.

Then there’s the additional good news: only 16% of Americans use GARS frequently (2%) or sometimes (14%); 17% use them once in a while; 67% never use them. (I discuss this at greater length in this column about liquid behavior.)

Car manufacturers, in other words, don’t have to worry about massive car-buying declines in 2018, but I wouldn’t be optimistic about 2020. We see a slow erosion in car buying, but more importantly we see change within the cars being purchased.

The people who choose to own cars will have more specialized needs (more on this below), and this means that manufacturers will need to customize their vehicles to a greater extent than they do today. That’s grim for mass scale where, for example, Toyota sells a few million Camrys that are all pretty much the same.

On the other hand, new production technologies — like the adjustable drive train from Faraday Futures — will make this customization cheaper for manufacturers. The last stage of production for your next car might happen at the dealership, via a gigantic 3D printer.

The second stage of the transportation revolution is all about self-driving cars, and you can’t find a better overview of why driverless cars will change everything than in this column by Center founder Jeffrey Cole.

Self-driving cars are no longer the stuff of science fiction. This week the U.S. House of Representatives will vote on “a sweeping proposal to speed the deployment of self-driving cars without human controls and bar states from blocking autonomous vehicles, congressional aides said,” according to Reuters.

But even if this legislation magically passed from House to Senate to the president’s desk and received approval in 24 hours, it will still be years before self-driving cars are everywhere. As science fiction author William Gibson famously quipped in 1993, “the future is already here: it’s just very evenly distributed.”

Tomorrow’s car buyer

The national — even global — fascination with self-driving cars is understandable, but it’s also a distraction from important changes in transportation, the first stage of the revolution, that will hit home a lot sooner.

To see this, let’s zoom in on one chart from our forthcoming Future of Transportation report. We asked people who used to have a car but had given it up this question, “Do you miss anything about having access to a car?” Here are the top five answers:

The most interesting answer is the fourth: 31% of respondents miss being able to keep their stuff in a car. The flip side of this, of course, is that 69% of people don’t give a hoot about using a personal car like a high school locker.

This suggests that for the vast majority of people there is no specific, concrete reason to own a car. “Convenience” is vague, and most people will trade convenience for cash much of the time. Independence, the fun of driving and not having to rent a car to go on a long drive, are similarly vague.

But being able to keep things in a car is concrete, and from that we can draw some tentative conclusions about who will own cars in the future.

Parents of very young children — babies these days need approximately a ton of plastic crap that poor Mom and Dad have to lug around — will find it inconvenient to have to install a car seat every time they drive somewhere. Likewise, parents with more than two children won’t want to play Uber-Roulette and risk having to squeeze five plus bodies into four seats in the inevitable Prius.

Anybody who works out of a car — gardener, plumber, contractor, surveyor, electrician, or locksmith — will need a dedicated vehicle. Sporty people who need a lot of equipment — skiers, surfers, kayakers, campers — or bikers who want a rack on their car to drive to the nice places to ride will want a dedicated vehicle.

But for the rest? The people who just need to move their bodies from place to place carrying a backpack or briefcase?

Most of those people will probably buy another car when the time comes: the big question is will they buy another car a few years after that? The answer is only “maybe” because — for the first time in a century — they no longer have to own a car to get around.

[Cross-posted on the Center site and elsewhere.]

Comment here and have it link to Facebook!

Leave a Reply

Your email address will not be published. Required fields are marked *