Change on the Horizon: Future Trends in Car Ownership and its Far-Reaching Implications

 

There are a number of reasons to be excited about self-driving cars, from the expected positive environmental and social impacts to the thrill of using cutting-edge technology. One particularly exciting possibility is the potential for self-driving cars to reduce car ownership, and the benefits that this may have for users and cities alike.

In an industry report conducted by SMLL, nearly 30% of respondents noted that they thought the introduction of connected autonomous vehicles (CAVs) will lead to a reduction in vehicle ownership. This is an important insight to consider given the current prominence of private car ownership.

Today, the number of vehicles in the world is an estimated 1.2 billion and in the UK this number sits at over 37 million. This means that there is more than 1 vehicle for every two persons in this country, and only about 20% of households do not own a vehicle today (a ratio that’s been relatively constant for the last two decades).

Despite the continued dominance of private car ownership, changes are taking place. There are a number of trends shaping our transport behaviour and mobility patterns, and larger cities such as London will likely be the first to be impacted. For instance, young people drive less, buy fewer cars and use more public transport. Why? Because it is inconvenient to drive in a congested city and cars are a costly asset to own, maintain and operate. Car clubs are however gaining popularity, providing a viable alternative for people who do not own a car. Moreover, cycling is on the rise, although it is still marginal with only about 2% of all trips taken by bike both in London and in England more broadly.

While ride-hailing services are also becoming progressively relevant, taxis and private hire vehicles (including Uber), similarly cover about only 2% of all trips in the city. Impacts of ride-hailing on the transport network are often very high though, as much of it is concentrated in city centres. It is expected that this type of service will grow rapidly, with adoption rates increasing yearly in other similar markets (there is no available data for London). Self-driving cars are expected to have their largest impact in the Private Hire sector, namely by allowing for increased vehicle utilisation, fleet optimisation, cost management and thus increasing profitability for companies.

How will this change affect us users? For one, we will be expected to buy trips, or eventually, period-passes instead of cars, petrol and insurance, adding to the package of options which sit under the Mobility as a Service umbrella. In this way we are essentially paying for what we consume without any upfront costs. Considering that, currently, vehicles are not in use most of the time and that their value gradually depreciates, this change sounds like it could be very advantageous for users. This could be beneficial both in terms of time (with parking no longer being a problem) and savings (with the capital cost of purchasing and running your own vehicle removed). At the same time, however, we would lose a level of flexibility and comfort that having our own car provides, including the convenience of leaving personal items inside a vehicle. Much like the home-versus-hotel comparison, how this change will be received might vary to a smaller or larger extent depending on the individual.

How will this change affect the market? Today, car manufacturers tend to sell their product to individuals and a smaller share to fleet operators, like taxi companies. Based on statements and investments made by these manufacturers, in the future many car manufacturers expect to become service providers (essentially a taxi company of a sort). It is shaping up to be a fierce competition, as the long term will prove the global mobility market to be a much larger beast than the global passenger car market ever was.

How will it affect cities? As a general principle, cities are trying to reduce the number of vehicles on the road, as they create congestion and take up valuable space. London’s objective is to have 80% of all trips carried out by public transport or active travel modes by 2040, leaving little room for private as well as service-based mobility. On the positive side, reducing private ownership and replacing them with fleets of self-driving vehicles could free up space currently used for parking. Businesses could find solutions that meet the specific needs of certain demographics and provide transport options in geographical areas are underserved by public transport.

While we will have to wait and see how this plays out, there are steps we can begin to take today. Indeed, what we can be sure of is that the full benefits of self-driving technologies will only be reached if all stakeholders provide input into planning their implementation. At SMLL, we are creating an environment with this very purpose, supporting service providers and transport authorities to develop solutions together.