You might conclude that it's back to the future for the car industry or, perhaps, the last dance of the dinosaurs. At this year's Geneva Motor Show, the premium is on horsepower, speed, glitz and girls draped on the bodywork of a fleet of carbon fibre stallions. Forget the affordable people's car; instead Volkswagen is pushing the more glamorous rides in its stable, such as a new 750-horsepower Lamborghini Aventador and the Bentley Speed 6, a new 2-seater coupe, intended to compete head on with Aston Martin. The British maker of cars for the affluent mid-life man has responded with its most extreme product yet, the £1.8-million ($3.4-million) Vulcan and, of course, there is a new Ferrari, the 488, capable of zero to 100 kph in three seconds.
Predictable, but also puzzling because the roll call of monster supercars seems to be more of an aggressive signal than a sigh of relief that sales are finally rising and that fuel is once again cheap. European car sales were up 6 per cent in January after a 5-per-cent increase in 2014, and in Canada, the acceleration in the growth of personal auto debt provoked a warning from the Bank of Canada. But these pumped-up roadhogs don't address the real market; there is nothing on show in Geneva that acknowledges the bigger picture: that the developed world may have already reached peak car.
Google and Apple seem to get what Motown dares not whisper – that consumers no longer care about speed, power and torque. The accent is on ease, which may mean a car that drives itself, a personal transport unit that you could rent by the day, summon from your smartphone to your door and verbally command to take you to the office or the mall with a brief stopover at the school gate. Speaking to the BBC in Geneva, Sergio Marchionne, the Canadian boss of Fiat Chrysler, said that the disruptive challenge by Google and Apple would be a good thing for the industry, but he admitted: "When you're the guy whose life is being disrupted, it's not necessarily a good feeling."
But it's more than just technology; it's a secular, demographic, economic and cultural slowdown in the mature economies that will force car companies to change their business models or go out of business. People in the richer world are driving less, car ownership in the main developed economies has peaked, and young people are learning to drive later or not at all.
The numbers seem to prove that peak car in the rich Western nations occurred in the mid-2000s, before the impact of the recession. According to statistics published by in a recent note by investment bank Schroders, drivers in the U.S., the U.K., France, Spain and Italy, people are burning fewer miles than they did in the early years of this century. Car ownership per capita peaked in the U.S. at 1.2 in 2007 and is now 1.15. More worrying for the car barons is the trend among young people to delay or even shun an apprenticeship with an internal combustion engine.
According to Schroders, millenials or young people born in the '80s and '90s are the "canary in the coal mine" for the auto industry. Statistics from both the U.S. and U.K. show a fall off in driving licence penetration among young people between cohorts in the 1980s and 1990s and in the first decade of this century.
Cost is obviously a major factor – it's not just the car and the lessons; insurance is a major deterrent for which even dirt-cheap gas is inadequate compensation. But car makers should not comfort themselves with the thought of pent-up driving demand hitting the showrooms among the thirty-something crowd. The evidence suggests that the ambition to get behind a wheel tends to dwindle rather than increase among those who put off getting a licence.
Cars are not cool any more. The gasoline engine plays little or no part in the lifestyles or ambitions of the very young. Bikes are cool; personal electronic devices are cool and big cities are cool. The accelerating concentration of jobs, opportunities and wealth in urban areas with networks of public transport will only increase the trend toward lower mileage and lower car penetration. Add to that Internet-based car sharing and rental schemes such as Zipcar, and we can expect to see a rapid decline in urban car ownership.
In the rich world, the car is becoming a middle-aged and increasingly suburban or rural accessory for the motor industry; the consequence must be an even more rapid investment shift to emerging markets, but it will not be a quick or easy solution. If the need for low-cost cars is acute in the developing world, there is an equal desire for status brands, equally prized by well-heeled mid-lifers in Berlin and Beijing . It is no accident that Tata, the Indian industrial combine chose to buy a prestige brand, Jaguar Land Rover, rather than a maker of cheap cars to boost its automotive business.
In Geneva this week, Mr. Marchionne comforted himself with the thought that his stable of brands includes Ferrari, Alfa Romeo and Maserati, famous names that could speed past the consumer bludgeon delivered by a robotic Google or Apple car.
"Why would you buy a Ferrari and not want to drive it?" he asks.
Mr. Marchionne has a good point, but the big question that remains unanswered is whether you still want to drive that Chrysler or Fiat.
Carl Mortished is a Canadian financial journalist based in London.