Get Into My Car: The Congested Future of Worldwide Auto Ownership

Photo: epSos.de

Given everything we hear about China’s economic miracle, you might think its vehicle ownership rate is about the same as that of the U.S. If so, you’d be partly right. China’s vehicle ownership rate is indeed the same as the U.S. rate — in 1916.
We’ve bought a lot of cars since then. So unless everything we know about the history of motorization is wrong, in the decades ahead China will too. And the impact of this will be large — not just there but here as well.
Just how many cars are we talking about? A recent paper by Joyce Dargay, Dermot Gately and Martin Sommer hazards some guesses.
You probably won’t fall out of your chair to learn there is a strong historical link between national income and national auto ownership levels. However, that pattern is not linear. Motorization proceeds at a pace that depends on the absolute level of a nation’s economic development.
Poor countries purchase few autos because very few people, even the relatively wealthy, can afford them. Up to national per capita GDP levels of about $4,000 (2010 dollars, GDP at PPP), the growth in car ownership has historically been quite low. For reference, $4,000 is about the per capita GDP of Honduras or the Philippines.
At about $4,000 a threshold gets passed. At this level nations begin to see the birth and development of a middle class (particularly, as Mark Kutzbach has pointed out in Access magazine, in nations with a fairly even distribution of income). So at $4,000 per capita GDP, auto ownership takes off, rising twice as fast as per capita income.
This rapid motorization slows when GDP/person hits around $14,000 (about the level of Mexico, Russia or Turkey); at that point, vehicle ownership continues to rise, but only at the rate of GDP/person growth.
Finally, at high national incomes (above perhaps $30,000, about the level of Italy, Spain or South Korea) auto ownership begins to saturate and level off. U.S. per capita vehicle levels have basically hit a plateau at about 800 per 1000 residents; since this is more vehicles than we have licensed drivers, we simply cannot handle more cars, except to the extent that our population grows.
Other rich nations have somewhat lower vehicle ownership levels than we do, but they are also starting to see the growth slow. The authors see European and other OECD nations peaking at about 650-800 vehicles, depending in part on their population densities and urbanization levels (less of each means more cars.)
And China? Currently its per capita GDP is about $7,500. That’s lower than that of Jamaica or the Dominican Republic (surprised?) and puts them right in the middle of the rapid motorization phase. Between 1960 and 2002 China rose from 0.38 to 16 vehicles owned per 1000 people.  Then, in the short period from 2002 to 2008, Chinese vehicle ownership more than doubled, to 37 vehicles per 1000. And that explosive growth rate seems set to continue into the distant future. The authors predict that by 2030, China will rise to an ownership rate of 269 vehicles per 1000 people.
It really wouldn’t be fair to talk about China without throwing India into the mix. Although the media sometimes makes it sound as if Indians are all a bunch of computer programming yuppies tooling around in sports cars thanks to the American jobs they’ve “stolen,” the sad reality is that despite India’s recent economic gains, as a group, the richest five percent of Indians have the approximate wealth level of the poorest five percent of Americans.
So with a per capita income of $3,300, India is just now beginning to reach the very first stages of mass motorization. It is lagging somewhat behind China, but still the authors predict its per capita vehicles level will rise from about 15 per 1000 people today, to 110 in 2030.
These per capita figures are large, and when multiplied by the gigantic populations of those two countries, the projected increases in total vehicles are colossal. The authors predict that by 2030 China and India will add about twice as many cars as the total number we currently have in the U.S.
By the way, we’re also going to see rapid growth in car ownership in other middle-income countries like Indonesia, Thailand, and Brazil. Those three countries alone are projected to add about half as many vehicles as we currently own in the U.S. between 2003 and 2030.
The bottom line is that vehicle ownership worldwide is expected to rise from about 800 million in 2002 to about 2 billion in 2030. And even then, Asia will only be at 15-45 percent of vehicle saturation levels, so rapid growth will continue into the distant future.
Prognostications of this sort are, of course, always dangerous. Rising congestion and fuel prices, or draconian government anti-auto policies, might slow the growth of motorization in the developing world. But past experience has almost universally proven that it’s impossible to put the auto back in the bag; even nations with excellent public transportation and hosts of anti-auto policies, like Japan or many places in Europe, have auto ownership levels that are fifteen to twenty times China’s today. Building a few light rail lines is not going to stem the tide.
This is certainly good news if you own stock in Toyota, but what does it mean for the rest of us? Next time, some thoughts.