Is Private Car Ownership Doomed?

photo credit: Doha News

According to the business press, auto manufacturers are investing big time in car sharing companies. The reason? Declining new car ownership among young people. Americans under forty (most of whom work for minimum wage) simply can’t afford the luxury of a new car at $32,000 a pop. According to Zero Hedge, half of 25-year-olds still live with their parents, and  one third of US households struggle to pay food, rent and transportation every month (ie they have to choose between the three).

Despite all the hype put out by the Obama administration, the economy isn’t recovering. The global economy is shrinking, and more importantly the total number of jobs is shrinking (as Wall Street continues to transfer our jobs to third world countries or replace us with computers or robots). A significant decline in wage and salary levels has accompanied the loss of jobs – with most workers extremely grateful to have any work at all.

Thanks to this dire economic scenario, an entire generation is opting not to buy cars but to rely on public transportation, active transport (ie cycling, walking etc) or car sharing. Auto manufacturers, seeing the writing on the wall, are all joining forces with car sharing companies. Last month, the New York Times reported on the partnership Toyota is forming with Uber, with Volkswagen is investing $300 million in the European car sharing company Gett and General Motors $500 million in an Uber competitor called Lyft. Meanwhile BMW, Mercedes Benz, Daimler and Audi are starting their own car sharing companies.

According to TechCrunch, BMW, which already operates a European car sharing program in ten cities, has just started a program in Seattle called ReachNow. It enables enable Seattle residents to access 400 cars that they can pick up and drop off wherever they like. Daimler has a similar service called Car2Go that’s available in New York, Austin, Minneapolis, Vancouver and Portland, Oregon. Earlier this year, Audi has launched a car-sharing service in San Francisco and Miami called Audi at Home.

The fact that financial analysts (and auto makers) are anticipating the end of private car ownership is one of the more ominous reminders that the middle class is vanishing. As wages and employment levels continue to decline, private cars are going the way of airplanes – only the 1% can afford them. The other 99% of us are expected to share.