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Share of miles traveled via a personally owned vehicle was 64% for Gen Z and 65% for Millennials, compared with 71% for Gen X and 82% for Boomers.

Growing Transportation Services Will Hurt Retail Auto Sales, Study Says

“As new solutions are introduced, consumers, particularly the Millennials and Gen Z, may move away from the traditional avenue of personal vehicle ownership,” says Cox Automotive researcher Isabelle Helms.

Burgeoning transportation alternatives eventually could claw into traditional vehicle ownership, according to the latest installment of the Cox Automotive Evolution of Mobility Study.

Other studies indicate Americans appear loath to give up their personal vehicles, but the Cox study says retail auto sales in the U.S. could drop nearly 30% as alternatives to traditional ownership become more accessible and affordable.

Many consumers – especially young ones – “are ripe for disruption, suggesting they’re willing to walk away from personal vehicle ownership,” Isabelle Helms, Cox Automotive’s vice president-research and market insights, says at a company event held in conjunction with the 2019 North American International Auto Show in Detroit.

Nearly half of consumers Cox surveyed say car ownership is too expensive.

Thirty-six percent of respondents expressed an interest in reducing the number of vehicles they own in the next five years.

“Bottom line: the smart, new alternatives to car ownership will have an impact on retail car sales in the future,” Helms says.

She adds, “As new solutions are introduced, consumers, particularly the Millennials and Gen Z, may move away from the traditional avenue of personal vehicle ownership.”

In the study, current cost of ownership was estimated at 50 cents per mile driven. In a scenario where alternatives are widely available and at a cost of 60 cents per mile, the relative similarity of costs between the two (coupled with other factors) could cut into personal vehicle sales.

But the study says that at the same time, fleet sales may likely increase, offsetting the drop. 

With more questions around the affordability of personal vehicle ownership, younger generations are least likely to prefer traveling in a personally owned vehicle if all mobility alternatives – including ride-sharing and ride-hailing services – were accessible to them.

Share of miles traveled via a personally owned vehicle was 64% for Gen Z and 65% for Millennials, compared with 71% for Gen X and 82% for Boomers.

Millennials and Gen Z currently are spending the most money on their transportation with an average cost per mile of 71 cents and 79 cents, respectively, the study says.

This is significantly higher than Generation X (56 cents) and Baby Boomers (50 cents). Cost per mile for ownership is generally higher for Gen Z and Millennials because of their likelihood to use various modes of transportation beyond their own vehicle as a result of the shorter distances they need to travel because many of them live in urban areas, the study says.

On the other hand, Wes Lutz, a Michigan dealer and 2018 chairman of the National Automobile Dealers Assn., cites a recent AAA Foundation for Traffic Safety study that says the cost of relying on ride-hailing services as primary transportation in 20 of the biggest U.S. metro areas is more than twice as much as owning a car. (Isabelle Helms, left)

“I know how my customers define transportation freedom,” Lutz says during a recent speech in Detroit. “They define it by having the ability at any moment to go where they want, when they want.”

When all alternative ownership models are made fully accessible, car subscriptions see the most potential growth in share of miles traveled, from less than 1% today to 10% in the future, according to the study.

Potential future price decreases for ride-hailing and car-sharing will largely depend on the integration of autonomous-vehicle technology.

Dealers could play a key role in the vehicle-swapping that is part of most subscription services, Helms says.

“Dealers are attuned to the (mobility-as-a-service trends),” she says. “They are thinking about how they might offer services at dealerships, but they’ve never done it before. They do recognize change is coming.”

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