‘Peak Car’ or demotorisation is a term used to describe a society’s reduced dependence/loss of interest in cars, typically characterized by lack of growth in new car sales (market saturation), and a decline in driving license applications.
The phenomenon was first noted in Japan in the early 2000s. In a country where parking spaces are hard to come by, fuel prices are high, compulsory periodic vehicle inspections are very costly, but public transport is extremely efficient, and many young Japanese no longer own a car.
Many Japanese families now own just one car. It also explains why minivans are so popular there and sedans are falling out of favour, because if you are going to rely on just one car, that one car has to do everything.
A typical Japanese family today owns just one car, usually a utility type vehicle - minicar (kei), minivan, SUV or wagon, rarely a sedan.
The same trend has also been noted in USA and western Europe, but limited mostly to metropolitan cities. As more and more young people migrate to megacities, it’s a natural progression for people to drive less, and rely more on ride hailing or public transport.
The idea of a two-car ownership household in the suburbs is becoming less mainstream as today's young people marry later, and are more likely to stay closer to the city centre. In a developed city, this means having to deal with limited and expensive parking, and public transport becomes a more logical option.
The latest data compiled by data scientist and Twitter user Owen Boswarva confirmed what many had already suspected – nearly 30 percent of the UK citizens aged 25 and below don’t have a driving license. The numbers get more depressing as you dig the numbers for younger Brits – note the large gap between blue line (total population, by age) and red line (driving license holders) among young Brits, and how the gap closes significantly among older Brits.
In other words, the concentration of driving age population is heavily centred on older folks rather than the young.
In the UK, the minimum driving age is 17 but a 16 year olds can apply for a provisional license. Drivers aged below 20 years old are merely a blip on the chart. People born in an earlier era see holding a driver's license as a rite of passage into adulthood. Today's young don't see it that way.
There are many factors behind this. While some sociologists conclude that increased interaction on mobile and digital platforms mean that the current generation of youths don’t hang out in the same way as previous generations, others say it’s simply the poor financial standing of millenials - the generation most affected by the 2008 financial crisis. Against this pessimistic outlook, today's young prefer to spend their money on holidays and commitment-free purchases like gadgets, rather than being tied down to a car, which requires maintenance and lengthy repayment terms.
Many of today’s youths are also burderned by student debts with poor job prospects. This is especially true not just in Europe and USA, but also in Japan and Korea.
Contrary to the narrative that many Malaysians usually hear, car ownership is actually rather prohibitive even in many developed countries. Beyond the seemingly lower selling price, drivers in those countries pay a lot higher than us for fuel, insurance, maintenance, and parking. Many drivers leave their cars parked at home but commute to work via public transport – as it should be for any developed nation - or use ride hailing services.
Cars might be cheaper in other countries, but their drivers also pay RM5.50/litre for regular petrol (about RON 90) and RM6.00/litre for premium petrol (about RON 98), plus far more expensive parking. Traffic regulations are also strictly enforced so don't think about parking anywhere you like.
Strict emissions and safety regulations also mean that prices of new cars have been creeping up. Consumer data shows that even consumers in many higher income countries are keeping their cars longer than before.
Sales of passenger cars in Japan peaked in 1990, with 7.8 million motor vehicles sold. Today the figure is only around around 5.2 million.
Between 2003 and 2013, more than 100 driving schools in Japan have closed down, mostly because young Japanese are not interested in learning how to drive. Driving license applications dropped by more than 300,000 during that ten-year period.
Germany and USA are still behind Japan in terms of advancements of public transport and equal access to mobility for everyone, but signs are pointing that these two automotive powerhouses are also reaching their peak.
Applications for driving licenses among Germans aged 25 years old and below have slid 28 percent over the last 10 years – something that was once unimaginable for a country famed for its love of cars and speed limit-free autobahns.
In USA, the minimum driving age is 16 years old. Back in 1983, nearly 50 percent of 16 year-old Americans held a driving license. Today, the figure is just 25 percent (figures from University of Michigan Transportation Research Institute).
Against this backdrop, it explains why there are so few affordable, ‘fun to drive,’ rear-wheel drive manual transmission cars – the sort of cars young enthusiasts want – are available on the market. The simple explanation is that there is just simply not enough people buying such cars to make the product viable.
With interest in cars on the downtrend, you can expect the rise of SUVs and crossovers – whose high hip point and ease of access/exit are favoured by older buyers - to intensify. The trend towards electric driverless cars will continue unabated. To a new generation of consumers who see cars and driving as simply a mean to get around rather than a source of joy, a maintenance free and pay-as-you-use driverless cars/robotaxis is perfect.
For those of us who love driving, it only means one thing - if you have something special parked in your house, cherish and take good care of it because they won't make anything like that anymore. There are few brands who are resisting the tide of change.
Toyota's Akio Toyoda is a CEO on weekdays and racer on weekends and he is the world's strongest advocate to make cars cool again for young people, while Mazda wants to keep combustion engines alive, Jinba Ittai included. Honda has (at least in Japan), attempted to make cars cool again with mini sports car like the S660. While nearly every brand is resigning to their fate, the least that enthusiasts can do is to support the efforts of those who are holding the torch to forward the cause for analogue cars.