34m Americans will be driving at least 50 miles this Memorial Day weekend, which marks the start of the summer ”driving season”. But contrary to popular belief, the average American is driving less these days.
The total number of miles driven is still increasing due to the rising US population. But on an individual basis, people are driving 6% less than the record set in 2004. As the chart shows, based on latest US Dept of Transport, US Census Bureau and Energy Information Administration data:
- Miles driven have fallen from an average 13274 (21632km) per adult in 2004 to 12493 over the past 12 months
- Higher prices clearly discouraged driving, but the lower prices of recent years have not had a major impact
- This is a clear contrast with the past, when Americans immediately set new records once prices fell back
The reason seems to be two-fold:
- One key factor is that older people drive less than when they were younger. Older people no longer have to drive to work once they are retired, and they also stop being a taxi service for their children. Thus those aged 74+ drive 60% fewer miles than those in the 34-43 age bracket
- A second factor is that younger people are no longer so attached to driving, or indeed even to obtaining a driver’s licence. Thus only around 4 out of 5 young Americans aged 20-29 held a driver’s licence in 2010, according to BMW data. We can speculate as to whether this is due to the high cost of cars, or to the competitive challenge posed by social media as a way of communicating with friends, or to greater environmental consciousness, or a combination of these and other factors. But we can be reasonably sure that those without driver’s licences are unlikely to be buying cars
The automotive industry has therefore lost traction with 2 key segments of the population. Older Boomers are in fact now reversing the original “flight to the suburbs” of the 1960s/1970s, and instead are returning to the cities in ever-greater numbers, further reducing their need to drive. Younger people no longer have the “love affair with the car” that characterised previous generations.
We can also see this trend starting to impact car ownership.
- The market peaked at 840 vehicles per 1,000 population in the subprime years, and is now back at 2000 levels of around 810 vehicles per 1,000 population
- This historical perspective has been obscured by the excellent new car sales volumes seen recently, with 2015 volumes rivalling those seen in 2000 at the peak of the Boomer-led SuperCycle at 17.3m
- It is easily forgotten when making comparisons that the total US population has increased by 37m (13%) over these 15 years
- The long-term trend of vehicle sales per adult driver is in fact back at levels not seen since the 1960s
And, of course, major new disruptive trends are impacting the US car market with the arrival of car-sharing, taxi-services such as Uber and Lyft, and autonomous vehicles. As GM president, Dan Amman, warned earlier this year:
“We think there’s going to be more change in the world of mobility in the next five years than there has been in the last 50 years”
Companies supplying the auto industry will clearly have to follow GM’s lead. Service-driven business models based on promoting mobility rather than car ownership are likely to be critical for success in our emerging New Normal world.