Caution: Bumpy road ahead.
2016 made carmakers very happy. Americans bought a record number of cars — 17.5 million light vehicles, to be precise — and drove a record number of miles in six months, 1.58 trillion miles, a 3% jump from the same period in the previous year. They also consumed a record amount of gas — 405 million gallons a day, in June 2016.
But the celebration might not last long. Experts predict that car-buying numbers will start to dwindle, and that 2017 will be winter for carmakers.
There are a number of factors driving this change.
For one, costs of owning a car are higher now than ever, even as vehicles spend 95% of the time in the parking lot. Auto insurance is the highest it’s been in 13 years — in April 2016, insurance prices shot up 7.2%, the largest annual increase since October 2003. And lenders are beginning to crack the whip on auto loan interest rates as delinquencies rise.
And, as costs rise, alternatives spring up. The meteoric rise of transportation network companies and ride-sharing apps, such as Uber, Lyft and Fasten appears to be making a dent in car ownership.
As Lyft made $700 million in sales last year and Uber’s valuation oscillated between $28 billion and $63 billion, automakers don’t want to be left behind on this ride. Last year, General Motors invested $500 million in Lyft to develop driverless cars and in January this year, Daimler struck a similar deal with Uber.
If this trend continues, studies show that all of San Francisco’s cabs can be replaced with 650 “shared cars.” And then, of course, there is the fantasy of making shared, autonomous electric vehicles less futuristic and more ubiquitous.
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We might not be that close to giving up on car ownership completely, but social data suggests that the conversation has certainly begun. Crimson Hexagon’s analysis of social conversations around transportation signals this trend.
In this post, we dive into the social discussion around car-buying and highlight three threads within it:
- Changing urban centers
- The rise of ridesharing, and
- The evolving economics of car ownership
Buying to Share?
Our data also highlighted an interesting correlation between talks of car buying and ridesharing in cities like Austin and Philadelphia with fewer public transportation options. In those cities, ridesharing conversation and car-buying conversation tend to rise in tandem. The interesting question here is: are these city residents buying cars to cash in on the lucrative market of offering ridesharing services?
The joyous milestone of purchasing a first car dominated the car-buying conversations on social, as did people sharing their family and friends’ new car-buying experience, as well as comparing the cost effectiveness of buying a new car versus a used car.
The more somber conversations, however, were about the realities of car ownership, especially related to the financial difficulties associated with low credit scores, monthly payments, and auto loans.
To place this in a larger context, car-buying is just one piece of the larger puzzle of what matters to audiences when it comes to transportation. Conversations about driverless cars, public transit infrastructure and perils of ridesharing are some other interesting vectors of social conversation surrounding transportation. We will explore some of these in the coming weeks.