End of automobile era?

As 50 of the world’s leading automobile manufacturers displayed their latest machines at Auto Expo 2014 held outside Delhi, one worry that surely dominated the minds of many of the executives gathered there was that car sales are declining gradually across the globe.

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Published: Sat 15 Feb 2014, 10:59 PM

Last updated: Fri 3 Apr 2015, 9:31 PM

While auto sales have been falling significantly in the US and many countries in Europe in recent years, China (the world’s largest car market) and India (one of the fastest growing car markets) were to have revived the fortunes of the industry. But car sales in India in 2013 slumped by nearly 10 per cent, the first time the industry recorded negative growth in 11 years. In China, the authorities in several cities including Beijing, the capital, have imposed severe restrictions on car sales to curb rising pollution. The demand for cars has slackened in India mainly because of the high interest rates, which discourages people from buying a vehicle. India, which is currently the sixth largest market for automobiles, is expected to emerge at number three behind China and the US in just about three years. Fortunately, nearly half the 2.6 million cars that are sold every year are fuel-efficient, compact vehicles that go a long way on a litre of petrol or diesel.

But in the developed world, there is growing consumer resistance to the acquisition of new cars, not as part of a ‘green’ movement, but mainly because of the economic crisis. A recent report by the University of Michigan’s Transportation Institute notes that 9.2 per cent of American households do not own a car now, as against 8.7 per cent in 2007. In New York City, 56 per cent of residents do not own a car and prefer commuting by other means. Almost 40 per cent of residents in Washington DC do not own a car. In six of the 30 largest US cities, more than 30 per cent of households do not own a car. In Europe, many cities are opting for ‘greener’ means of transportation and prohibiting cars from city centres. Hamburg, for instance, plans to ban cars from 40 per cent of the city area in just about 20 years.

Worryingly for the industry, the young are increasingly choosing not to buy a car. A study in the US found that there has been a 30 per cent decline in the sale of cars between 2007 and 2011 to those in the 18-to-34 age group. IHS Automotive, a leading international consultancy, in a report — Is car ownership a thing of the past? — warns that trends in urban motorisation could reduce the number of motor vehicles in use globally in 2035 by 250 million from the current level of one billion.

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