or much of modern history, the automobile played a fundamental role in the cultural and economic identity of America and the world. In the post-World War II world, the rise of the family car and the development of suburbs were inextricably linked. Neither could exist without the other and both played critical roles in the global economy.
But in recent years, younger generations have increasingly snubbed suburban comforts for the opportunity of higher income in urban centers. They have opted to forgo the traditional coming-of-age car purchase for a Metro card, a bicycle, or an Uber account. The summer road trip faded as affordable air travel made international travel destinations more attainable. In the eyes of many economists, the heyday of the automobile had passed, replaced by a future dominated by public transportation, ridesharing, and automation.
Then COVID-19 hit.
Within a few short weeks, the world ground to a halt. While the long-term impacts of COVID-19 on attitudes towards transportation remain to be seen, enough evidence exists from prior crises and the initial re-emergence from full lockdown to draw some initial conclusions about how this dramatically disruptive crisis may play out on the transportation industry.
Bad news for shared modes of transportation.
In the new socially distanced reality, shared modes of transportation appear likely to suffer—both public transportation and previously booming rideshare services. In a recent global survey of those who use mass transit regularly, 41% said they would use it less often. In the United States, transit ridership and fare revenue has fallen by as much as 80%-90%.
While the impacts of such a dramatic shift in commuter habits may be mitigated by a workplace future in which remote work is more widely accepted, rebuilding trust in the safety of public transportation will be a fundamental challenge in a post-COVID-19 world. In order to re-promote shared mobility, public transportation systems must implement and communicate strong safety and social distancing measures. Additionally, they may need to consider rate discounts or other incentives to entice riders to return. While these measures may be a tough pill to swallow for ridership systems already reeling from reduced revenues, restoring confidence and rebuilding trust in public transportation will be an essential post-pandemic task across the globe.
Public transit system administrators may find a measure of long-term solace among indications that the long-term regulatory environment appears likely to favor carbon-neutral and shared modes of transportation. It is also important to note that these modes of transportation remain vital for residents on the lower end of the socioeconomic scale. Further, long-term analyses of the economic impacts of the 2009 American Recovery and Reinvestment Act (ARRA) indicate that public transit initiatives produced 70% more job hours than those focused on highways—an important proof point for public transit systems seeking to justify their broader socioeconomic impact.
Mixed news for car salesmen.
In a future where individuals are reluctant to share personal space, the automobile may experience a resurgence. However, in an economy defined by uncertainty and market volatility, consumers may be less inclined to invest in new cars. In fact, as a result of increased demand, low interest rates, and reduced new car supply due to temporary COVID-19-related closures of car manufacturers, the global pandemic may lead to a boom for the used car market.
In the United States, the average listing price of used vehicles was $21,558 in July 2020, up $708 from June 2020. Elsewhere in the world, the global pandemic is driving similar car industry trends. China has seen a dramatic surge in car sales as consumers increasingly shift to personal modes of transportation. In Europe, months of pent-up consumer demand appears to be driving a resurgence in the automobile industry.
Looking at prior global crises, overall economic health and the job market appear likely to emerge as the most impactful factors for the automotive market. While the current global environment is not experiencing the high gas prices or credit issues associated with the Great Recession, the spike in unemployment claims does pose continued questions about the appetite of consumers to invest new vehicles. In the long run, automakers, policymakers, and urban planners will be compelled to grapple with policies that impact the balance between personalized and shared modes of mobility, as well as factors relating to the ability of consumers to invest in automotive purchases.
An opportunity to refocus on environmental impact.
While the long-term environmental impacts of COVID-19 on the world remain unclear, from a transportation perspective its psychological impact appears clearer: it has driven a re-examination of the essentiality of travel and the modes of travel used. In the United States, nationwide sales of bicycles, equipment, and repair services have doubled. Similarly, air travel, the most carbon-intensive form of transit, has dropped by 70%. In many ways, the global pandemic has created an opportunity to rethink both transportation emissions and consumer perspectives on transportation.
Preserving and extending these environmental benefits will hinge on a variety of factors, not the least of which is the ability of public transportation to rebuild a sense of trust and safety in order to avoid a fundamental shift from shared to personal mobility.
The immediate impacts of COVID-19 on the global transportation ecosystem have been sudden and dramatic. In the long run, the ability of policymakers, urban planners, and transportation industry stakeholders to responsibly shape consumer behaviors will be essential to a transportation future that balances safety, sustainability, and convenience.
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COVID-19 Could Save Car Ownership
November 14, 2020
COVID-19 has made commuters more cautious about ride sharing, potentially boosting car ownership. However, financial and environmental challenges remain.
F
or much of modern history, the automobile played a fundamental role in the cultural and economic identity of America and the world. In the post-World War II world, the rise of the family car and the development of suburbs were inextricably linked. Neither could exist without the other and both played critical roles in the global economy.
But in recent years, younger generations have increasingly snubbed suburban comforts for the opportunity of higher income in urban centers. They have opted to forgo the traditional coming-of-age car purchase for a Metro card, a bicycle, or an Uber account. The summer road trip faded as affordable air travel made international travel destinations more attainable. In the eyes of many economists, the heyday of the automobile had passed, replaced by a future dominated by public transportation, ridesharing, and automation.
Then COVID-19 hit.
Within a few short weeks, the world ground to a halt. While the long-term impacts of COVID-19 on attitudes towards transportation remain to be seen, enough evidence exists from prior crises and the initial re-emergence from full lockdown to draw some initial conclusions about how this dramatically disruptive crisis may play out on the transportation industry.
Bad news for shared modes of transportation.
In the new socially distanced reality, shared modes of transportation appear likely to suffer—both public transportation and previously booming rideshare services. In a recent global survey of those who use mass transit regularly, 41% said they would use it less often. In the United States, transit ridership and fare revenue has fallen by as much as 80%-90%.
While the impacts of such a dramatic shift in commuter habits may be mitigated by a workplace future in which remote work is more widely accepted, rebuilding trust in the safety of public transportation will be a fundamental challenge in a post-COVID-19 world. In order to re-promote shared mobility, public transportation systems must implement and communicate strong safety and social distancing measures. Additionally, they may need to consider rate discounts or other incentives to entice riders to return. While these measures may be a tough pill to swallow for ridership systems already reeling from reduced revenues, restoring confidence and rebuilding trust in public transportation will be an essential post-pandemic task across the globe.
Public transit system administrators may find a measure of long-term solace among indications that the long-term regulatory environment appears likely to favor carbon-neutral and shared modes of transportation. It is also important to note that these modes of transportation remain vital for residents on the lower end of the socioeconomic scale. Further, long-term analyses of the economic impacts of the 2009 American Recovery and Reinvestment Act (ARRA) indicate that public transit initiatives produced 70% more job hours than those focused on highways—an important proof point for public transit systems seeking to justify their broader socioeconomic impact.
Mixed news for car salesmen.
In a future where individuals are reluctant to share personal space, the automobile may experience a resurgence. However, in an economy defined by uncertainty and market volatility, consumers may be less inclined to invest in new cars. In fact, as a result of increased demand, low interest rates, and reduced new car supply due to temporary COVID-19-related closures of car manufacturers, the global pandemic may lead to a boom for the used car market.
In the United States, the average listing price of used vehicles was $21,558 in July 2020, up $708 from June 2020. Elsewhere in the world, the global pandemic is driving similar car industry trends. China has seen a dramatic surge in car sales as consumers increasingly shift to personal modes of transportation. In Europe, months of pent-up consumer demand appears to be driving a resurgence in the automobile industry.
Looking at prior global crises, overall economic health and the job market appear likely to emerge as the most impactful factors for the automotive market. While the current global environment is not experiencing the high gas prices or credit issues associated with the Great Recession, the spike in unemployment claims does pose continued questions about the appetite of consumers to invest new vehicles. In the long run, automakers, policymakers, and urban planners will be compelled to grapple with policies that impact the balance between personalized and shared modes of mobility, as well as factors relating to the ability of consumers to invest in automotive purchases.
An opportunity to refocus on environmental impact.
While the long-term environmental impacts of COVID-19 on the world remain unclear, from a transportation perspective its psychological impact appears clearer: it has driven a re-examination of the essentiality of travel and the modes of travel used. In the United States, nationwide sales of bicycles, equipment, and repair services have doubled. Similarly, air travel, the most carbon-intensive form of transit, has dropped by 70%. In many ways, the global pandemic has created an opportunity to rethink both transportation emissions and consumer perspectives on transportation.
Preserving and extending these environmental benefits will hinge on a variety of factors, not the least of which is the ability of public transportation to rebuild a sense of trust and safety in order to avoid a fundamental shift from shared to personal mobility.
The immediate impacts of COVID-19 on the global transportation ecosystem have been sudden and dramatic. In the long run, the ability of policymakers, urban planners, and transportation industry stakeholders to responsibly shape consumer behaviors will be essential to a transportation future that balances safety, sustainability, and convenience.
