The generation of vehicle ownership is over. For the past fifty years, the American dream has included putting an automobile in each garage to equip every character with contemporary transportation. But current transportation is hastily evolving, meaning the American dream is unexpectedly changing, too.
The purpose continues to be to equip everyone with modern transportation. However, personal vehicle possession isn’t the best method of reaching that aim anymore. Now, thanks to technological improvements, smartphone proliferation, and the quick upward thrust of ride-hailing (or ride-booking) offerings, Americans no longer want a car to get around. Instead, they can rely on ride-hailing and car-booking offerings for almost all their transportation demands. That is primarily why automobile possession rates have plateaued around ninety-one % of American households for the past decade, versus a steady vehicle possession charges trend increasing over the prior half of the century.
This shift in trend continues to be in its early tiers. Ride-hailing is best grown in reputation and getting the right of entry. Technology is best getting better at improving purchaser consequences in the trip-hailing space. The desire to personalize a car is turning smaller and smaller. Populations are becoming increasingly more city-centric. Individual car ownership expenses are rapidly growing, as are the traffic delay troubles related to having too many automobiles on the road.
Consequently, it seems increasingly like we’re in the early stages of an earthly decline in automobile possession charges. That’s a massive deal. For the past fifty-plus years, the fashion in vehicle ownership rates has increased. For the next fifty-plus years, the trend may be down. The financial implications of this extraordinary pivot are massive. So, how can traders play this trend nicely? Let’s take a more in-depth look at three capacity trades to play the enormous vehicle ownership price reversal trend over the next numerous years:
The most apparent way to predict a secular decline in vehicle ownership charges is to buy the stocks of the businesses immediately liable for this trend shift. That includes the new public trip-hailing business enterprise Lyft (NASDAQ: LYFT) and its extensive, soon-to-be-public peer Uber.
These two organizations are pioneering what is known as the TaaS, or Transportation-as-a-Service, a marketplace in North America. At scale, the TaaS market is meant to make owning a vehicle old-fashioned, similar to the SaaS marketplace, which made proudly holding on-premise software obsolete by providing a wide variety of transportation offerings via a navy of drivers to the masses. Importantly, Uber and Lyft are the best relevant players in this market and control 98% of the U.S. Experience-hailing marketplace.
This marketplace supplies automobile transportation services for humans looking to get from factor A to point B. So, naturally, as vehicle ownership rates fall, reliance upon and usage of those offerings will grow by leaps and bounds. But that’s merely the tip of the iceberg for what Uber and Lyft can do with an army of drivers and programmers. They can tap into logistics (turning in programs from factor A to factor B) and remaining mile transportation (scooters and bikes), among different matters.
