Consumers will own fewer cars by 2025
Published: December 14, 2015
Updated: July 24, 2018
Author: Luke Jones
CATEGORY: Car Insurance
Cars across Canada and the United States are selling record numbers, but in the coming decades sales of new cars may decline as consumers pursue drive sharing models. That’s the potential situation according to Gartner Research, which says some 20 per cent of all cars will not be owned by an individual by 2025.
To put that into perspective, in just 10 years one in five cars on the road will come from some kind of drive sharing pool or company. Gartner predicts that consumers will increasingly turn to companies like Uber or car sharing services that reduce the costs of auto insurance coverage and strip the financial burden of owning a car away from customers.
There will be an increasing trend where the amount of automobiles will decline compared to populations that will grow. Berlin, Germany is one example of this pattern in action, where there are 10,000 fewer cars on the road compared to a decade ago, while over the same time the city’s population has increased 100,000.
Despite record sales for cars this year the new car market is actually being outgrown by car sharing and ride sharing services, which have grown 34 per cent in the United States in 2015. By 2025 it is predicted the market could have some 24 million customers. The leasing market is in particular jeopardy from drive sharing services as consumers will be able to avoid monthly payments for a vehicle that will depreciate and will cost more to insure and run that if they share a vehicle or ride share.
So much so that some researchers suggest that the new car bought in 2015 may be the last one that many consumers will own. Car sharing is definitely here to stay and manufacturers are scrambling to be a part of it for fear of seeing sales of their vehicles decline. Industry heavyweights such as Toyota, VW, Audi, Ford, BMW, Nissan, and Honda have all introduced car sharing initiatives in certain markets.
However, while the car sharing model (where consumers will go to a location to pick up a car to use for limited time) is becoming popular, the ride share industry is exploding. That’s due to the company Uber more than any other, which has spread its wings around the world with stunning speed and efficiency. Ride sharing sees Uber (and other companies like it) actually pick the consumer up, which is why it had been described as a Quasi taxi service.
As controversial as Uber is, and it is, the company is giving consumers an alternative to owning their own vehicles and it is a trend that is probably going to change the automobile industry in the long term.