Auto industry nightmare: consumers are giving up cars for good

June 2, 2017

Unprecedented changes are taking place in today's auto industry. Companies old (e.g. Ford, Toyota) and new (e.g. Tesla, Waymo) are working overtime to make cars that run on battery power, drive themselves, and function as taxis.

They're doing all that to prepare for a future 10 or 20 years down the road, when electric, autonomous, shared vehicles will have changed the way we think about transportation. Only problem is, at least one new survey shows that the future may be closer than many had thought.

That survey was conducted by Reuters and Ipsos, and it showed that roughly 25 percent of U.S. adults had sold or traded in their vehicles during the previous year. The vast majority of those folks purchased a new car to take the old one's place.

However, nine percent of them (or 2.25 percent of all American adults) said that they were turning their backs on cars for good. When they need to get around by car, they plan to use ride-sharing services like Lyft and Uber. 

But wait, there's more: another nine percent of those who bought new rides said that they were planning to give up the keys within the next 12 months. 

If the figures are accurate, it would mean that 4.5 percent of adults in America are already using ride-sharing as their primary means of transportation or will be doing so within the coming year.

Caveats

The Reuters/Ipsos poll isn't perfect. For starters, the sample size was relatively small: pollsters queried 584 adults who indicated that they'd sold or traded in their vehicles within the previous year and another 566 who said that they intended to do so within the coming year. While we've certainly seen smaller surveys, we'd want to see data from a larger number of respondents to verify that the poll's findings hold up from coast to coast. 

Most importantly, though, this survey was the first of its kind. As a result, there's no way to tell whether the trend toward ride-sharing services is accelerating, decelerating, or flat. 

On the other hand

That said, it's also possible that the poll understated the trend away from car ownership because it didn't include questions about car-sharing services like Zipcar and Maven. If it had, the number of folks giving up their cars would've almost certainly been a bit higher. 

Also, the poll does mirror some trends we see in the U.S., especially the increasing rate of urbanization. According to the CIA, 81.6 percent of Americans lived in urban areas as of 2015, and between 2010 and 2015, that figure climbed 1.02 percent each year. As more of us live in cities, owning cars becomes less and less attractive thanks to the cost and scarcity of parking, not to mention the higher cost of living. In cities with large mass transit systems, taking a bus or the subway is often much faster and cheaper than keeping a car on hand.

And finally, the Reuters/Ipsos survey echoes some other studies that we've written about over the past several years. For instance, not one, not two, but three studies have shown that the number of miles each American drives has been falling since 2004. The trend is particularly pronounced among young people, who tend to gravitate toward cities and who are comfortable with the idea of getting around by bike, bus, or Lyft. Unless those trends reverse, car ownership rates will probably continue to drop.

Bottom line: whether the Reuters/Ipsos numbers are 100 percent accurate is up for debate. But if they are--or even if they're close--they suggest that change will be coming to the auto industry faster than some of the rosiest predictions we've seen. 

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