The Countryside Could Stall Greener Cars

It’s become a given in urbanist and sustainable-mobility discussions that in the future we’ll all be living in mega-metropolises. As a result, Americans will need to radically revise our car- and freeway-dependent transportation grid. Except that maybe we won’t.

The U.S. Census Bureau just released a report indicating that “outlying counties grew faster than central counties” between 2000 and 2007. Here’s some salient language:

Outlying counties as a whole grew more through net migration than through natural increase (defined as births minus deaths). Nationwide, the average annual rate of net migration for outlying counties was 12.5 per 1,000 population compared to a 4.8 per 1,000 average annual rate of natural increase. Central counties followed the opposite pattern, with a larger proportion of their growth attributable to natural increase (6.6 per 1,000) than to net migration (3.6 per 1,000).

In other words, urban growth is due to increased birth rates within cities, while growth outside cities is due to people moving away from urban areas.

Obviously, in the United States, moving from the city to the suburbs or exurbs almost always means obtaining personal transportation. And while new data from the past two years may change this overall demographic pattern—taking into account the financial crisis, gas-price shocks, increased awareness of global warming, etc.—I think what’s really important here is how the trend will affect the ultimate size of the post-recovery new-car market. Because it’s become another given that the global auto industry is mired in overcapacity, churning out too many cars. But I’m not so sure. I think we may be setting ourselves up for a problem of undercapacity.

For GM (GMGMQ) and Chrysler to become profitable after Chapter 11, they allegedly need to build fewer vehicles and right-size for a North American market of 10 million new car sales per year. By 2014, this market is supposed to amount to 14 million to 16 million new vehicles.

If you overlay these data elements, you can see that the market for new cars should grow, as should the opportunity for carmakers selling vehicles in North America to add capacity. This means new opportunity for potential exporters, such as the Chinese and the Indians, but also the potential for the bankrupt Big Two to rapidly return to profitability. What’s worrisome is how this will affect the fashionable push to build small cars. Outside of urban areas, small cars aren’t as popular. So the real challenge for automakers going forward in North America may be how to provide large-platform mobility while also achieving government-mandated green objectives.