Europe’s auto association (ACEA) has joined India’s in worrying about likely future sales levels. As the chart shows, it reports volumes “reached a historic low for the month of January (red square)”. Even German sales were down 8.6% versus 2012. Whilst the downturn in Spain’s econony meant its 47m people bought fewer cars than Belgium’s 11m population.
Car sales are not only a major part of household consumption. Autos are also Europe’s largest manufacturing industry. So we can now expect a downward spiral, where car firms shut factories due to lack of demand, which will reduce people’s spending power, and so lead to even fewer car sales. In turn, GDP growth will remain weak, at best.
Underlying this trend, however, is something of potentially even greater importance. As the blog noted last month, auto sales in the west are now in long-term decline. As UBS report, most sales are now replacements, with only 2% being additions to the car fleet. The ageing population means people drive less, and they have less money to spend on cars as they enter retirement.
Equally, it seems a generational trend is underway in the attitudes of young people to cars. Dr Tobias Kuhnimhof of BMW’s Institute for Mobility Research in Germany, has kindly provided the blog with soon-to-be-published analysis of “new travel trends among young adults“. Based on surveys in the USA, Germany, Japan, France, the UK and Norway it shows:
• Car ownership among young adults (20-39) has decreased in most study countries
• This builds on his earlier research which suggested “a strong indication of profound changes in the travel behaviour of young adults in industrialised countries with signs of decreasing car orientation and reduced overall travel”
• Thus several countries are seeing fewer young adults with driving licences
• The fall seems focused on young men, with young women’s share remaining stable
The analysis leads Kuhnimhof to suggest we may be seeing the development of a “peak car” phenomenon. Young people, like their parents, seem less interested in the status symbol provided by the possession of a shiny new car. This seems to link with our view in Boom, Gloom and the New Normal that people increasingly prefer to define themselves on the basis of their personal relationships with family and friends.