‘Peak Car’ and the End of an Industry

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For years, Martin Bruesch was the bread and butter of the German auto industry. He routinely used his 211-horsepower Audi A4 station wagon for the 20-minute trip to the office.

Now on work days his car usually stays parked outside his apartment in the affluent Berlin neighborhood of Charlottenburg and the 32-year-old human resources executive hails a new carpooling service instead.

“If I’m truly honest with myself, then owning a car is too expensive with all these alternatives around,” Bruesch said as he got into one of CleverShuttle’s battery-powered Nissan Leafs one evening this month.

As young people like Bruesch increasingly ditch driving, they’re also accelerating the shift toward what’s being dubbed “peak car”—a time in the not-too-distant future when sales of private vehicles across the western world will plateau before making a swift descent.

This is especially true in big cities where people are becoming more inclined to share rather than own a vehicle that sits idle most of the time. The number of Germans 25 and under getting driving licenses slid 28 percent in the past decade, and it’s a similar story in pretty much every other major economy.

It’s a moment of reckoning for an industry that had been able to count on three things since the automobile was invented in Germany more than a century ago: cars ran on combustion engines and people not only desired to own one, they also drove it exclusively. With the age of car-sharing, battery-powered fleets and self-driving cars upon us, automakers need to reinvent themselves into mobility companies to survive.

It’s hardly surprising, then, that luxury Mercedes-Benz manufacturer Daimler AG bought a stake in CleverShuttle after it began operations in 2016. The service uses an Uber-like app to pair individuals searching for a ride with other commuters in the same vicinity. In the five German cities it runs, users have more than doubled since January to 650,000.

Fast forward just five years and such services will eat into automobile sales, leaving carmakers vulnerable if they don’t find ways to augment their income, according to Munich-based consultancy Berylls Strategy Advisors. By 2030 in the U.S., where data is most readily available, Berylls predicts that total sales of cars – individually owned and shared – will fall almost 12 percent to 15.1 million vehicles.

“It will be the first time carmakers ever have to deal with a decline that’s structural, and not down to temporary factors like an economic downturn,” said Arthur Kipferler, a Berylls consultant who previously worked for Jaguar Land Rover Automotive Plc. The Tata Motors Ltd.-owned brand this year teamed up with Alphabet Inc.’s planned self-driving Waymo taxi service to deliver 20,000 electric I-Pace crossovers.