Retail auto sales in the US could drop as much as 29% as alternatives to traditional vehicle ownership becomes more accessible and affordable, according to research from Cox Automotive.
The third phase of its evolution of mobility study found nearly half of consumers surveyed believe car ownership is too expensive, while more one-third (36%) are interested in reducing the number of vehicles they own in the next five years.
Currently, in a typical month, 93% of miles traveled are in a vehicle that someone personally owns, while ownership alternatives only account for 3%.
If all transportation alternatives were available to them regardless of where they live, consumers would increase their usage of mobility alternatives. The share of miles traveled by personally-owned vehicles would drop significantly to 72%.
The most significant driver for consumers’ transportation decisions is ownership or usage cost, which includes monthly vehicle payments, maintenance, insurance, gas, and any other costs that contribute to the cost per mile.
Cost is twice as influential as the type of transportation method and more than five times as important compared against issues such as the amount of time consumers wait for a ride and amount of time committed to a transportation method (i.e. term of a loan/lease).
Once all options become available and there is price parity between transport choices, a consumer will be more likely to shift their miles away from personally-owned vehicles.
Once this happens, Cox Automotive predicts personally-owned vehicles will account for just 61% of miles traveled, contributing to a 29% decline in new-vehicle retail units sold.
The tipping point will be when alternative ownership costs reach 35 cents per mile. However, this switch is not currently achievable, as it is reliant heavily on the full adoption of autonomous vehicles.
When comparing ride hailing, car sharing and car subscription services, accessibility is a top barrier to adoption.
However, 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% currently to 10-25% in the future. This compares to ride hailing and car sharing, which will both account for 1%.
Isabelle Helms, vice-president of research and market insights at Cox Automotive, said: “The smart, new alternatives to car ownership will have an impact on retail car sales in the future.
“As with any consumer product, awareness, accessibility and cost will be the main drivers. Consumers are open to finding alternatives to traditional car ownership. As new solutions are introduced, consumers, particularly the Millennials and Gen Z, may move away from the traditional avenue of personal vehicle ownership.”