The global automotive industry is on a roll. Sales are surging in many regions, and advances in hybrids, electric vehicles and conventional cars are delivering mileage gains. For example, BMW just launched its first electric vehicle while US EV sales have doubled during the first half of 2013.
However, automakers face a worrisome trend. Data suggest that many Western economies have hit "peak car," a point of market saturation characterized by an unprecedented deceleration in the growth of car ownership, total miles driven and annual sales.
The factors behind the peak car conundrum are both expected and surprising. The first --congestion -- is familiar to any driver. The second factor -- technology -- may be less obvious, but poses a potent drag on growth of new drivers.
Regarding congestion, the carrying capacity of roads in wealthy economies, especially in cities, is maxed out. Drivers are increasingly fed up with the growing toll, in both money and minutes, posed by congestion and rising gas prices.
But technology is a different, and perhaps more surprising story. Young people are waiting longer to get their licenses and buying fewer cars than prior generations due to a decreased interest in driving, in part due to the allure of technology and devices.
Zipcar recently surveyed adults aged 18 to over 55, asking them to rank which technology would be most difficult to lose: car, computer, cell phone, or TV. Among Millennials (those between 18 - 34 years) the car loses out to both computers and cell phones. Computers come very near to beating cars as top priority for 35 to 44-year-olds.
The good news is, technology can also help alleviate the congestion causing the peak car conundrum. By connecting cars directly to the constellation of mobile, cloud and location technologies, cars can tap into the intelligent guidance that is already helping travelers to share cars and minimize jams. Connected cars will also speed refueling, ease city parking and eliminate much of the wasted time and travel that contributes to congestion today.
Car sharing programs have gained fans on all fronts. For consumers, they lower the cost of auto use. Carmakers, meanwhile, are eager to see if fleets for car sharing can help them earn more per vehicle over its lifetime. City planners like this model because it lowers the number of vehicles on city streets. Car share-pioneer Zipcar estimates that each of its vehicles replaces the purchase of at least 15 private cars.
Car sharing's success depends as much on behind-the-scenes data services as it does on conveniently located vehicles. Smart back end systems for car sharing services eliminate the customer hassles of conventional rentals. Their success is an early example of how connected cars can deliver mobility while reducing congestion.
Parking services are another frontier of progress. During peak hours, a third of neighborhood congestion comes from cars cruising for parking spots. By guiding drivers directly to open spaces, these new services can cut the volume of cruising. San Francisco is one of a growing number of cities developing smart parking spots on city streets that sense when they're open. Mobile app developers are using that data to guide drivers to the nearest spot.
Electric vehicles are a hotspot of connected-car innovation, too. Since EV drivers can't afford to be stranded with an empty battery, manufacturers are today collaborating with utilities, retailers, charging networks and other key players on software that directs drivers to available chargers at their destination.
But it's with the connected car that Millennials don't need to choose between automobiles and their mobile device or laptop. With the cloud, mobile and big data-enabling technologies embedded in cars, they are beginning to act as a different category of mobile devices unto themselves. And what's more, these cars are hooked into all the services a driver might need, from pre-paid parking to discounts on your morning coffee-to-go.
Connected car transactions are growing more complex. Joining automakers, garages and fuel stations, newcomers such as banks, utilities, cell phone companies, mapping services and retailers are also scaling their efforts to connect with vehicles. For these nascent services to flourish, the connected car community faces a challenge to develop the digital infrastructure necessary to exchange data reliably, quickly and flexibly.
In the cloud, remote analytics can process the volumes of big data necessary to deliver real-time location services to millions of vehicles. Secure wireless links and high-volume transaction processing can help settle complex financial exchanges between vehicles and the grid.
This fits into a greater vision, one where an interconnected world operates more intelligently. It's a future where mobile devices seamlessly trade information with the cloud, and where powerful analytics analyze these streams to respond to users with ever-more-useful guidance just in the nick of time.
That might mean predicative warnings about traffic conditions, a tip to find an open parking space just as a driver pull's into her destination or perhaps a well-timed text about a great deals at a favorite store as you're driving nearby.
With smarter, connected cars, the auto industry and its allies may yet prove that the so-called "peak" is really just a prelude to an era of connected cars that not only cut congestion, but boost the economy and make drivers' lives a bit easier.