Have We Reached “Peak Cars on the Road”?

Published: September 2019 (5 Min Read)

Examining the possible effects of the ending of PPI payments, we discussed the possibility that it might affect auto sales in the UK. But in thinking about it further, I wonder whether we are approaching the point at which we no longer need more cars on the road.

Although we now have a cyclical drop in new car sales, we are still adding to the number of cars which are licensed. According to the DVLA the number of cars on Britain’s roads has risen inexorably from a little over 21 million in early 1994 to 31.7 million in the first quarter of 2019. Recessions do not cause this number to fall, only to increase more slowly. (Source: DVLA: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/882196/vehicle-licensing-statistics-2019.pdf)

The Society of Motor Manufacturers and Traders (SMMT) in its latest sales overview for July 2019 (https://www.smmt.co.uk/vehicle-data/car-registrations/) reported that sales had fallen 4.1% compared to July 2018, and that sales for the year-to-date were down 3.5%.

Nothing earth shattering about that, but the detail within the statistics caused me to wonder whether there is a quiet shift to more sustainable approaches to travelling around in our daily lives.

This was the fifth consecutive month of declining overall sales, but the twenty eighth consecutive month of declining sales of diesel cars.

Sales of fully electric vehicles (EVs) were up 158% – still only 2271 cars and 1.4% of the market, but the SMMT forecasts that in 2020 51,000 will be sold, which would be 2.2% of the market.

This still appears glacial, rather than revolutionary, but manufacturers have to build the assembly lines, and the infrastructure for re-charging EVs remains sparse. Even so, if the growth rate continues, they will soon reach 10%.

So much for the facts. Now for a little informed imagination, for which I am grateful to the futurists at Baillie Gifford.

They see three major trends:

1. The shift from internal combustion engines to electric ones. This “is inevitable. As the price of batteries continues to fall, we are at, or close to, the point where electric vehicles (EVs) make economic sense. There is growing consumer acceptance, and there is also growing political will, as many governments have committed to phasing out diesel vehicles.”
2. The shift in the economic model of ownership to on-demand. This is a “structural shift, driven by the ride-hailing companies such as Uber and Lyft. The long-term promise of these companies is a world where few people own cars and few cars sit idle. This will impact not just auto-makers, but insurers, dealers, repair shops, and more. With ride-hailing accounting for just 1 per cent of miles travelled in the US in 2016, we are still a long way off this long-term vision. Today, the cost of an Uber or Lyft is approximately two dollars per mile, compared to the cost of car ownership at about one dollar per mile. Much will depend on their abilities to reduce the cost from here. These are price elastic markets and a small drop in price can result in large increases to demand.”
3. The shift from humans behind the wheel to autonomous driving. This is “the least developed, but one that will have the most profound impact on society. 1.4 million people globally lose their lives on the road every year; the average American driver spends 51 minutes each day commuting (the equivalent to nearly 40 eight-hour working days in a year); millions of elderly and or disabled people have difficulty accessing the transportation they require; and the vitality of urban landscapes are affected by congestion and parking spaces. Autonomy has the potential to solve all these issues, and more. This is made possible by advancements in computing and machine learning.”

Perhaps I am premature in asking the question, but this seems to be the general direction of travel. My children, who are in their twenties, do not wish to have a car in London, and most of their friends have the same opinion. For those of us in more rural situations it is difficult to conceive of not having a car but think about being older and being able to step out of the house and to instruct the car to take you somewhere. That would be highly desirable.

Imagine not having to negotiate with your spouse about who is driving home after a dinner party!

It all seems to add up to a better quality of life and fewer exhaust fumes, but it may still be a few years away.