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article imageStudy: Congested cities to see less car sales

By Angela Atkinson     Feb 18, 2014 in Technology
Traffic congestion in urban cities in China, Brazil and Russia will cause a 30 million-vehicle annual decline in auto sales by 2035, according to a new joint study by IHS Automotive and Groupe Futuribles.
The study research firms expect the number of vehicles driven globally to fall, especially in certain countries not located in Europe and North America.
Limits on Car Registrations
Local governments in China are beginning to implement limits on new vehicle registrations, and such regulations are expected to affect auto sales in traffic-ridden cities. Most consumers expect China's car growth to continue for years, but it appears that may not be the case in urban areas.
"Tomorrow's cities just cannot fit the same number of cars per person," IHS Automotive managing director Phillip Gott, said in the study.
American automakers have invested billions of dollars to establish a distribution infrastructure in China, but future growth in the Asian country are likely to be capped by government-imposed limits.
In China, there are several cities that are beginning to restrict the sales of new cars: Dalian, Beijing, Shanghai, Guiyang and Guangzhou. Hangzhou, Chengdu, Tianjiin, Shenzhen, Shijiazhuang, Chongqing, Qingdao, and Wuhan could also impose similar caps in the near future.
These restrictions could significantly affect auto dealerships, lenders, aftermarket service providers, and other businesses tied to the local auto industry.
Cars Per Capita
In 2009, China overtook the U.S. as the world's largest auto market by sales. Auto sales in China are expected to reach 21 million vehicles this year -- U.S. sales are projected to be 16.4 million.
In Europe and United States, there are about 400 to 500 cars per thousand people.
In a city like London, more commuters are electing to take public transportation. Car ownership in London is falling, with 0.76 cars per household, compared to 0.78 last year, according to data from London Councils.
With millions of public commuters in London, service providers -- such as buses, taxis, and railways -- are seeing an increase in business. For instance, public providers are availing of black cab insurance policies as the market matures to convey coverage to drivers who need it.
Cities in Asia are even more densely populated, but often do not have the same level of highway and road infrastructure as their Western counterparts. Thus, Asian cities can have less cars per capita than New York or London.
Beijing has about 130 cars per thousand people, and the city has capped the number of vehicle registrations at 6 million.
How will Russia and Brazil deal with their traffic congestion? Such countries could soon follow China's lead by also placing caps on auto sales and registrations.
More about Car sales, China, Brazil, congested cities
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