A world of fewer cars and less driving

Auto industry consultants KPMG see fewer cars and less driving in our future

That may be bad for the car business, but good for the environment and cities

One clear implication: hold off building new road capacity

There’s little question that the pandemic has altered the way we live in the present, the big unresolved questions are how this experience will change the way we live in the future.

One of the most powerful effects of staying-at-home during the pandemic has been a dramatic drop in car travel, with vehicle miles traveled in typical metropolitan areas declining by more than half in the first two months after the domestic onset of the pandemic.

We’ve adapted in a variety of ways; many professional and administrative workers have figured out how to work remotely from home, which has reduced commute trips.  At the same time, we’ve turned to internet shopping and delivery services for a larger number and wider array of goods and services that would ordinarily have required trips (mostly car trips) from home.  Our new familiarity and growing alacrity with Zoom, Amazon, Instacart, Doordash and their ilk could translate into permanent changes in the amount of car travel. Even though these are imperfect substitutes for high-touch and face-to-face experiences, they could definitely reduce travel by some amount.

That question is of keen interest to many, and especially to the world’s car-makers.  KPMG, the international accounting and management consulting firm has a practice devoted entirely to the automotive industry (car-makers and their suppliers) and has dived deeply into the likely impacts of pandemic-induced travel behavior changes on the demand for driving (and cars). Their report, Automotive’s new reality: Fewer trips, fewer miles, fewer cars?, is aimed at the auto industry, but has important implications for cities and transportation.  If, as KPMG predicts, we drive less and buy fewer cars, that should substantially reduce urban traffic congestion and pollution, and eliminate the purported reason to expand road capacity.

KPMG’s headline finding is that changes in commuting and shopping travel will sharply cut into car travel in the US:

. . . we estimate that total U.S. VMT could drop by 140 billion to 270 billion miles per year. The first-order effect would be a reduced need to own a vehicle and lower demand for new and used cars. We estimate that car ownership could fall from 1.97 to as little as 1.87 vehicles per household. That may not sound like much, but it could translate into 7 million to 14 million fewer vehicles on U.S. roads.

These changes would be driven by a permanent shift to more “work-at-home” and more online shopping.

Retail:  A dramatic reduction in shopping trips.

As we’ve stressed before at City Observatory, on-line shopping reduces vehicle miles of travel (VMT), because the reduction in car travel to and from stores dwarfs the increase in vehicle miles traveled to make deliveries. MIT Economist Will Wheaton estimates that on-line shopping is produces about 30 times fewer VMT than car travel to brick and mortar stores.  KPMG estimates that the growth of on-line shopping and delivery could reduce shopping tripes by 10 to 30 percent, reducing driving by as much as 130 billion miles per year, equal to up to 5 percent of all personal VMT.

Fewer trips, and less driving means fewer cars

Fewer commute trips and fewer shopping trips has an obvious implication for the automobile industry:  it’s likely that consumers will buy fewer cars.  Overall, the KPMG study estimates that there would be a 5 percent reduction in car ownership per household, and that this in turn would mean 7 million to 14 million fewer vehicles on the road.

While it might be bad if you’re in the car business, fewer cars and less driving would produce huge benefits for many of us, and especially in cities. Already in the pandemic, cities have experienced the cleanest air in decades as auto-pollution has declined from less driving. Less driving also generally means fewer car crashes and car deaths, a point which KPMG acknowledges, with an decidedly pro-industry spin:

Falling VMT would also affect used-car sales and aftermarket parts and service: less driving also means less wear and tear on vehicles, as well as a decline in traffic accidents, cutting into the lucrative collision parts business.

And less driving should mean less road building

And here’s the big public policy implication:  fewer cars on the road means less demand for car infrastructure. Keep in mind that the usual rationale for road-building and road widening is that we’re driving more and more every year.  If car driving and car ownership are going down, then logically, we should need to build fewer roads than we would otherwise.

Reducing vehicle miles of travel is the surest, most economical, and most environmentally beneficial way to reduce traffic congestion and emissions.  As the experience of the Coronavirus has demonstrated, reduced levels of travel have translated into more efficient highways, in some cases actually moving more cars at the peak hour faster than when we allow highways to become saturated by excess demand.

Already, state and local highway agencies should have gotten a pretty strong signal about falling demand for roadway capacity in the form of declining gasoline tax receipts. Just as KPMG is warning the automotive industry to plan for a world with fewer cars and less driving, state Departments of Transportation should be heeding the same call.

Some will doubt that KPMG is clairvoyant on these matters, but regardless of whether one believes their projections or not, there’s a very strong argument to be made that cities and states should hold off on committing to major capital construction projects that are predicated on an ever-growing amount of vehicular travel.  In a year or two, once we’ve (hopefully) worked our way past the Covid-19 pandemic and the recession it induced, we’ll have a better idea of how the behavioral changes play out in terms of travel demand. Now is not the time to be widening highways.

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