Last year, buyers moved into a condominium project in Vancouver’s historic Gastown neighbourhood, bringing to a successful conclusion a bold experiment in modern residential development. It proved something local developers had begun to suspect: you don’t need to build parking for every unit. In fact, you don’t need to build much parking at all. The building has just 13 parking spaces for its 112 units. Explained Michael Braun, sales and marketing manager for developer Westbank Corp., to the Vancouver Sun: “A lot of people buying here weren’t interested in any form of vehicle ownership or use.”
The City of Vancouver long ago relaxed its requirement that developers build at least one parking space for every unit in their buildings. Now the metropolitan region is considering a staff report recommending all 24 member municipalities reduce their parking requirements, noting that between 18% and 35% of apartment parking spaces in Metro Vancouver sit empty, day-in, day-out. At a cost of $20,000 to $45,000 per stall, parking adds significantly to the cost of a home, the report argues.
“We’re at the beginning of the end of the age of the car,” says Vancouver councillor Geoff Meggs, a vocal advocate of the rule changes. Not everybody agrees with him, of course. Meggs has faced a lot of blowback from his suburban counterparts. Across the country, Toronto Mayor Rob Ford has vowed to end the “war on the car” by converting bike lanes back to vehicle lanes and attempting to steer transit upgrades toward subways over streetcars.
Governments spent four decades fruitlessly trying to lessen North Americans’ dependence on the car. Beginning with the oil shocks of the 1970s, governments introduced policies aimed at curbing driving and its environmental side effects: lower highway speed limits, higher fuel and parking taxes, expansions of subsidized transit and bike lanes, standards for automobile efficiency, emissions and fuel content. None of it seemed to make a difference. Vehicle registrations per capita continued to rise (surpassing one vehicle per person in the U.S. in the 1980s and early ’90s), distances travelled got longer, and sales of larger, less-efficient vehicles increased.
In the past five years, however, that pattern has finally reversed—good news for the environment and energy security, but a signal of a dramatic reshaping of our economy, which for a century has been built around automobility. Considering that seven of the top 10 companies on the Fortune Global 500 are now either oil companies or automakers, this new trend promises to have profound business implications.
And the trend is definitely there. U.S. crude oil consumption peaked in 2007 at almost 21 million barrels a day. When the recession hit the next year, as you might expect, it dropped to between 18 million and 19 million barrels per day. But instead of recovering, consumption has stayed around 19 million barrels ever since.
Transportation researcher Wendell Cox, who popularized the phrase “war on the car” in a 2010 paper for the conservative Heritage Foundation that attacked the Obama administration’s “ideological and undeliverable goal of trying to divert travel away from cars to transit,” attributes that reduced consumption to two things: today’s cars’ improved fuel efficiency and the state of the economy. “This is not a normal time. We are in the depths of an economic downturn we haven’t seen anything like since the 1930s,” he insists. With fewer Americans working, fewer commute to work.
However, a number of studies released over the past year tell a different story unfolding over a longer time frame, especially among youth. Analyzing U.S. Department of Transportation statistics, a team from the University of Michigan’s Transportation Research Institute last November found that while 46% of 16-year-olds had a driver’s licence in 1983, that proportion dropped to just 31% in 2008. And it isn’t just a matter of tougher licensing requirements for teenagers. (Virtually all states have moved to graduated licensing and more expensive, privatized driver instruction.) The percentage of 20- to 24-year-olds with licences declined to 82% from 92%.
A report released in April by the Frontier Group, an environmental research organization, meanwhile, showed the number of miles driven overall decreased 6% between 2001 and 2009. Among people under 35, it went down 23%. “So they’re not getting their licences, or when they do they’re driving fewer miles,” sums up Sheryl Connelly, manager of global consumer trends and futuring for Ford Motor Co. And if young people aren’t picking up the driving habit, that portends ongoing declines well into the future.
Falling car utilization, in fact, has been documented throughout the developed world. British and Australian researchers have taken to calling the phenomenon “peak car.” The Japanese have their own expression for it, kuruma banare, which roughly translates as “walking away from the car.” While the most obvious cause is the extraordinary rise in fuel prices over the past 10 years—U.S. retail gasoline prices have essentially tripled (buffered by a rising Canadian dollar and higher but static gas taxes, Canadian prices rose less dramatically)—other factors commonly cited include traffic gridlock (which makes getting around by car no longer necessarily the fastest way), aging populations (seniors drive less than working adults), urbanization, increased land values (which raise the price of parking), increased health and environmental concerns, and growing income disparity (which increases the number of people who can’t afford to drive).
More than simply a function of economics or demographics, though, many observers sense a socio-cultural shift afoot. Baby boomers grew up in communities where the car was both essential for getting around and “the ultimate right of passage,” says Maurie Cohen, a social scientist at the New Jersey Institute of Technology. It was a way of escaping the social strictures of the family hearth and getting together with one’s peer group. Today, social networking has made this function redundant. The switch fits with their environmental values, Cohen adds. “Teenagers and 20-somethings have basically traded in a 2½-ton vehicle consuming large volumes of fossil fuels for a device that fits into the palm of their hand as a means of maintaining social connectivity.” What’s more, these devices are all but incompatible with driving; the very act of viewing, clicking and posting messages better suits the lifestyle of a passenger.
Compared to other countries, Canada lacks reliable data on driving participation rates and mileage, but there are indications of the trend at work here too. Transit ridership across the country grew 4.6% last year to just under two billion trips, according to the Canadian Urban Transit Association. In certain communities, it grew far more dramatically. In the suburban community of Brampton, Ont., for example, ridership grew 18% in 2011 on the heels of a 12% increase in 2010, the year the city adopted a new bus rapid-transit system featuring smartphone apps and electronic signs at bus stops to indicate wait times. A rapid-transit line between Richmond, B.C., and downtown Vancouver opened in 2009 is running about five years ahead of its pre-construction ridership projections. At the same time, Insurance Corp. of B.C. records reveal the number of vehicle registrations in Richmond declined between 2007 and 2011.
The long-marginalized practice of car-sharing is taking off too. Around 100,000 Canadians belong to co-operative car-sharing networks like Modo and Autoshare, and the number of users of for-profit systems like Zipcar and car2go (launching this summer in Toronto and Calgary) could be even higher. Meanwhile, the Montreal-based Bixi bike-sharing system is expanding as well. It’s already in Toronto and will be available in a total of four Canadian cities by this time next year.
And then there are changing demands evident in real estate development. Amid slowing sales and softening prices overall, condos in Toronto and Vancouver continue to sell briskly in locations with good transit access. Whereas real estate was all about “location, location, location” in the 1970s and ’80s, and “timing, timing, timing” in the 1990s and early 2000s, “it is now transportation, transportation, transportation,” says project marketer Bob Rennie of Rennie Marketing Systems.
The shift is also evident in the office market as employers respond to their employees’ demands for transit-friendly locations. In the past year, major corporations including United Airlines in Chicago and BP North America in Houston have moved their head offices from suburban office parks to downtown to be more accessible to non-drivers. In Vancouver, real estate advisory firm Jones Lang LaSalle last year began publishing a quarterly Rapid Transit Index tracking office properties within 500 metres of rapid-transit stations outside the downtown core. Currently, they show a vacancy rate of 6.5% compared to 12.3% for office space outside those zones. Average lease rates for RTI space came in at $22 a square foot, compared to $17 for office space better accessed by car.
That North Americans should suddenly change their long-fixed transportation habits will have profound impacts on other areas of the economy too. Yet the response to the trend in the industries most affected typically ranges from denial to obfuscation.
Energy companies “are finally waking up to the fact that the demand for oil is falling in North America, but they’re not really doing anything about it,” says Peter Tertzakian, chief economist for ARC Financial Corp. in Calgary. “In fact, they are just bringing more oil to the market!” Fortunately for the upstream side of the industry—companies that explore for and produce crude oil—energy demand continues to grow in the developing world, meaning producers that can get their product to those markets will continue to thrive. But for the downstream side—refining and retail—the challenges of recent years may just be the prelude to decades of slow contraction. As it is, the number of gas stations in Canada declined to 12,710 in 2010 from more than 20,000 in 1989, according to research firm the Kent Group.
It’s hard to avoid the conclusion that declining car ownership implies a slowly shrinking pie for auto manufacturers and dealers too (not to mention automotive finance—the U.S. Federal Reserve recently reported that the value of student loans had surpassed outstanding car debt for the first time). But the automobile industry’s understanding and interpretation of the trend is all over the map, says Ford’s Connelly. “There are some people who believe that the economy is the only obstacle and that once the economy comes back in full force, the millennials will come to the market. There are others who believe that once we design a car that really resonates with them then that will be the sweet spot.”
Connelly’s own research on young consumers suggests that the baby boomers’ whole insistence on owning things (from cars to DVDs to homes) may be giving way to a preference for access to things without the burdens of ownership. That, in part, explains why Ford last fall announced a partnership to supply vehicles to Zipcar’s fast-growing fleet across North America. German auto giant Daimler, meanwhile, owns rival car2go and supplies all its distinctive Smart cars.
Carmakers are also working to provide “online oxygen” to young people while they drive in the form of voice-activated information and entertainment systems that are becoming standard features even in the economy models youth are most likely to buy. These features, Connelly says, mean a lot more to young car buyers than horsepower, torque or turning radius.
What’s bad for the four-wheeled industry, of course, may end up being a boon for other sectors and for overall economic productivity. “These trends that are reducing per capita fuel consumption are actually very good for the Canadian economy because it means we’ll have more [oil] product to sell overseas, we’ll have a better balance of trade,” argues Tod Litman, executive director of the Victoria Transport Policy Institute. “It means Canadians will be able to buy more stuff.” He notes how Norway, an oil exporter with higher fuel taxes and lower automobile usage than Canada, has the highest per capita income of any nation-state (as opposed to city-state or tax haven) in the world.
It would be easy to conclude that we’re headed toward a future that looks more European all around, where the car is just one of several personal transportation options. But many trend watchers aren’t so sure. “The physical infrastructure of North America is what it is,” NJIT’s Cohen says. While some cities can and are moving to a mixed model of getting around, cities and suburbs designed in the postwar period specifically around automotive transport may be impossible to convert. “What happens to place like Phoenix or Houston or Atlanta—or, in your neck of the woods, Calgary?” he asks rhetorically. “Do these places become substantially less viable?” Everywhere, given the long-standing correlation between the fate of the middle class and the personal automobile, Cohen foresees a future when some people have cars, some have access to them but drive them less and some simply can’t afford them.
Litman maintains that public policy today will play a huge role in shaping the future. If the “war on the car” was a losing campaign, it was because it was never fought with much conviction, he argues. When compared with planning policies that, for example, provide free parking on most city streets at public expense and require builders to provide parking, he says, “the efforts to get people to drive less are hardly more than token.” It’s likely, then, that the transition to the post-automotive age will be spotty, happening in places where there is the will to change development and transportation practices and not in others. Even where car use is still commonplace, long-standing wisdom is being tested. Litman contrasts the runaway success of Richmond’s rapid-transit line with another big piece of regional infrastructure completed in time for the Olympics: the Golden Ears Bridge between Maple Ridge and Langley, B.C. Built to replace an old, free ferry service, the bridge offered a traditional response to population and traffic growth. But it’s become a liability for taxpayers as traffic and toll revenue have run far below projections rooted in an earlier era where drivers stuck to their habits, regardless of the cost. “One of the implications of this change,” Litman says, “is that people are much more responsive to road and parking pricing than what we predicted in the past.”
People’s transportation choices will come down to cost and practicality, based on what alternatives to the car are available in the places they live, work, take the kids to soccer practice and so on, Meggs says. While car travel declines overall and some communities get around more on foot, bicycles, buses and trains, others will stay married to the car—possibly unhappily so. “I think there’s different realities,” he says. “You can be as green as you want. If you can’t get to work by bicycle, and in the absence of convenient transit options, you’re going to have to drive.”