Americans drive less as demand patterns see major change

Consumer demand


US VMT Mar15Americans are driving less each year.  For the first time since records began in 1970, average vehicle miles per person has been declining for over a decade.  The trend is now so well established, it is highly unlikely that the current collapse of oil prices back to normal levels will change the overall picture.

This has enormous implications for companies and investors.  It means we have reached ‘peak car’ moment in the US market, and should expect auto sales to slowly decline in future years, even if the overall population continues to increase.

The chart above tells the story, based on official data for vehicle miles travelled, US gasoline prices and US population:

  • It shows average vehicle miles travelled per adult aged 16+ (the normal US driving age) on the horizontal axis, and average US gasoline prices on the vertical axis, since 1970
  • Average miles driven jumped from 8170 miles in 1970 to 9061 miles in 1980, to 11353 in 1990 and 12922 in 2000
  • Higher prices from 1978 to 1980, when they jumped from $2.34/gal to $3.48/gal, temporarily reduced miles driven
  • But then the period between 1981 – 2004 saw a 46% jump in miles driven to 13274
  • Since then, they have fallen 8.4% to average 12162 miles in 2014

There are two main reasons for the decline:

  • The first is the ageing US population:  people drive less as they get older as they stop acting as a taxi service for children, and no longer drive to work when they retire
  • The second is that younger people no longer see driving and car ownership as a ‘rite of passage’
  • The Millennials, born between 1983 – 2000, are far less likely than their parents to have a driving licence, and often prefer other forms of transport to cars
  • Thus less than 3 out of 4 high school seniors had a driving licence in 2010 according to Census Bureau data

The key issue is that the arrival of social media means young people have many more options today for staying in touch with their friends  They are also much more flexible in their transport preferences, often preferring to walk, cycle or take public transport where possible, instead of driving.

In addition, the inner city race riots of the 1960s/70s are now thankfully a distant memory.  And so instead of seeing a ‘flight to the suburbs’, we are now seeing the opposite –  a ‘return to the cities’, as ageing Boomers prefer to live closer to their friends and local amenities

Cost, of course, is also a key factor.  As an analysis in Fortune magazine shows, new car prices are now 30% higher in real terms (adjusted for inflation), than in the past.  Insurance costs have similarly risen more than inflation.

Thus today’s new 50th Anniversary edition of the Ford Mustang has a starting price of $23.6k, compared to the $18.3k cost in 1965 of the original model, in today’s money.   And the average new car price today at $32k is even more expensive

The vehicle miles driven data thus highlights the profound changes underway in US consumer demand patterns, as we discuss in chapter 11 of Boom, Gloom and the New Normal.  Companies and investors who still hope that the future might be the same as the past, have a nasty shock ahead of them.


European interest rates go negative as Draghi boosts stock markets


Historians will not look kindly on Mario Draghi, head of the European Central Ba...

Learn more

US$ breaks out of 30-year downtrend


Attention has rightly been focused on the collapse of oil prices over the past 6...

Learn more
More posts
Hertz goes bankrupt as non-essential consumer demand disappears

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 10...

Smartphone sales head into decline as affordability becomes key

The smartphone sales decline accelerated in Q1, as Strategy Analytics report: “Global smartpho...

China’s plastic ban and recycling launch marks end of ‘business as usual’ for plastics industry

Paradigm shifts start slowly at first, and it is easy to miss them. But then one day, they suddenly ...

Automakers face stiff headwinds in big emerging markets

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomb...

Portugal shows the way to climate neutrality by 2050

“If you don’t know where you are going, any road will do”. The Irish proverb’...

The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones

Smartphone sales plateaued in Q3, down 9% since Q3 2017’s peak of 1.55bn, as the chart shows....

Companies ignore the Perennials 55+ generation at their peril

Nearly a third of the the world’s High Income population are now in the Perennials 55+ generat...

Auto markets set for major disruption as Electric Vehicle sales reach tipping point

Major disruption is starting to occur in the world’s largest manufacturing industry.  Hundred...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more