Monday, 10 February 2014

More evidence of 'peak car' - in W. Europe at least

A piece in today's Financial Times, Carmakers face difficulty attracting young buyers, raises an interesting question about young consumers today. First - some shocking statistics. The average age of a new car buyer in German is 52.2 years. WOW! Only 27% of all new car buyers in Germany were under 45. WOW!!!

What's happening in the home of the automobile? This is what the car industry is desperately trying to work out. Is it simply that young people can't afford new cars? Battered by economic woes, precariously eking out a living between one zero-hours contract and the next, Germany's youth cannot even finance the cost of a new VW up!? Or is it that nearly-new cars - the definition today stretching even to vehicles between five and ten years old - have become so reliable that covering the massive costs of early-stage depreciation makes no financial sense? Is is simple demographics? Fewer young consumers?

Or is it something more worrying - that young Germans today are less interested in physical mobility than they are in smartphones, iPads, laptops, and assorted gadgetry of the connected world? To quote from the article: "urban-dwelling young people no longer prioritise owning a car and are choosing to spend their disposable income on other items, such as consumer electronics."

What is das autoindustrie doing to attract fewer young people with less money in their pockets and less desire to proclaim their individuality by car-ownership? It is making ever-bigger cars, it is focusing on performance not on economy, it is still locked into 1960s consumer mentality.

The new, new third-generation Mini (built in Britain by BMW) will be longer, wider and taller than the preceding model - and more expensive. Ludicrous. It should have been made shorter, narrower and lower. And less pricey, while maintaining high build quality, reliability and cool. Today's VW Polo is 20cm longer and 210kg heavier than the original 1975 VW Golf - a car one class up from the Polo. Maybe the motor industry's obsession with size is resulting in young buyers shunning its bloated products.

Two related stories from last Thursday's Daily Telegraph: Poor struggle to run a car - "The poorest car-owning households spend at least 31% of their disposable income on buying and running a car, up from 27% in 2012... the poorest families had a maximum weekly expenditure of £167, of which £51.40 went on a car. This included £16.40 on fuel, £9.50 on insurance and £6.10 for repairs and servicing," the article says, quoting the Office for National Statistics. This is followed by the usual bleating from the Royal Automobile Club Foundation, a car-users lobby, suggesting that fuel duty and VAT should be lowered. Rather than saying that the poor can become significantly less poor by abandoning the car altogether.

The second piece, by Harry Mount, compares obesity rates across the UK and rather unsurprisingly, finds they mirror the Toronto study I wrote about last month - cities built for and around the car are fatter. Take Milton Keynes, a new town, where 72.5% of all its citizens are overweight or obese. "When the master plan for Milton Keynes was drawn up in 1969, we were still in an age that worshipped the car - the biggest waist-expander in human history." Mr Mount assails the urban planners for what they did to England's towns and cities, "permanently scarred by worship of the combustion engine". He concludes: "It's easy to lose weight: flog your car today and move to a pretty place that avoided the evil attentions of Sixties town planners."

And if you cut back on your expenditure by 30%, you can afford the extra mortgage repayments, live in a nicer area, walk everywhere, be fitter, healthier and happier.

What should the car industry be doing now? Taking note of the fact that a major shift is occurring in Western society. We communicate by e-mail, SMS and dirt-cheap telephony; we increasingly shop on-line; physical distance is less of a barrier than ever.

Car rental, car sharing, chauffeur services, taxis, public transport, high-speed trains, urban light rail, cycle-friendly cities,pedestrian-friendly city centres - these are the future, not ever larger, every flashier cars offering ever-greater performance which can't be used legally or safely. Car ownership is a concept that's on the wane. In Western Europe, at least. Here, the notion that "you ain't no one unless you've got a BMW or SUV" will take a few more generations to work through.

For me the car of the future is the Volkswagen XL1 (below). Hybrid engine, 313 miles to one gallon (0.9l per 100km). To rent when going on holiday - but not to own.

This time last year:
Pavement for Karczunkowska NOW!
[We still don't have one... time for action.]

This time two years ago:
Until the Vistula freezes over

This time three year:
Of sunshine, birdsong and wet socks

This time six years ago:
Dziadzio Tadeusz at 90


Marcin Brzezinski said...

Sounds great.

Did you ever venture out of London without a car? :-)

Typical route is "20 minute drive, 90 minute by public transport".

Michael Dembinski said...

@ Marcin Brzezinski

"Did you ever venture out of London without a car?"

Twice a year. I hire a car for 6-8 days, new car, insured, fuelled up.

For exurbanites, it must be tough though.

Marcin Brzezinski said...

There we go then :-)

All in all it's the same old story, you either have the Tube or a car, anything in between can come in handy from time to time.

And while it might be true young people don't fancy driving for the fun of it, I don't believe they won't be going to the seaside for a weekend with mates, or commute to work.

Marcin Brzezinski said...

My own car usage is about 18,000 miles per year, 16000 of which are commute related.

For comparison - my wife drives about 4,000 miles per year ferrying the kids around.

In the last 6 months we placed about 100 Amazon orders though, and use online grocery services exclusively.

But still need the car to "pop over to the shops" from time to time when the weather is English.

Wilkbury said...

are you going?
Two wheels not four!

Michael Dembinski said...

@ Wilkbury - eroicabritannia - I love the artwork and typeface - extremely evocative!

@ Marcin
Size and fuel efficiency of car is important too. We brought up two children with nothing more than a 1-litre Nissan Micra that did 40mpg around town...

student SGH said...

27% of brand-new car buyers in Germany aged under 45. Excellent stats for used-car traders. It will be easier to find sprowadzony z Rajchu, od starego Niemca. In earnest, a car is a liability (not an asset) and actually can be a burden, not only financial, so in practical and monetary calculations, cost can outweigh benefits.