Peak Car
OOH …Here’s One Thing
by Jim Johnsen
You know that old expression, when your neighbor catches a cold, you get a flu? Well, Outdoor Industry look out, a flu may be coming. Do I have your attention yet?
Anyone ever hear of the term “Peak Car”? I hadn’t either until the Admirals Club provided me with a free Wall Street Journal this past Thursday, along with some great espresso. Love that place. In any event, I stumbled onto an article titled, “Peak Car Is Holding Back Global Economy” by Greg Ip. Mr. Ip, just back from the Tokyo Motor Show, reports that Toyota didn’t display any car models at this years show, but instead showcased a mobile app. Sounds like a fashion show with no clothes to me. Mr. Ip went on to report, car sales in the U.S. peaked in 2016. I fact checked him, and have to say that IMHO, he is technically right, but he is playing with the data and definitions a bit. It is true that car sales in the U.S. peaked at over 11MM cars in 1985, the same year Dire Straits put out “Brothers in Arms”, and since then, has been on a roller coaster down.
In 2018, U.S. car manufacturers sold 5.5MM cars. What Ip fails to mention is that light trucks (pick ups/SUVs) have picked up the slack (up 8% in 2018) and taken together, car and light truck vehicle sales have remained about constant. That makes sense, as it seems every middle aged mother in the U.S. now wants their very own personal assault vehicle and every young male, drives a pickup with testicles hanging from the tow hitch.
But I digress. Let’s take Ip as directionally right, in which case as he puts it, we are now in (or will be shortly), ‘Peak car’, a world with all the cars it needs. His hypothesis is interesting, and it turns out ‘Peak car’ is a thing large enough to have its own Wikipedia page:
https://en.m.wikipedia.org/wiki/Peak_car
Who knew? More importantly, who gives a rat’s arse Johnsen? Well, unless I am completely out to lunch, which is a distinct possibility by the way, I think we get paid to deliver eyeballs. If our client designs compelling advertising copy, these eyeballs should translate into real ‘impressions’ (i.e. it entered the brain on some level). If we cannot continue to grow the number of eyeballs we touch and impressions we deliver, we as an industry may flatten out, just the way the car industry appears to be doing. Ground Control to Major Tom…Johnsen, I am having a hard time following here.
Anyone remember that scene in Animal House where Otter is making his case before the Tribunal?
“The issue here is not whether we broke a few rules…we did. [winks at Dean Wormer] But you can’t hold a whole fraternity responsible for the behavior of a few, sick twisted individuals. For if you do, then shouldn’t we blame the whole fraternity system? And if the whole fraternity system is guilty, then isn’t this an indictment of our educational institutions in general? I put it to you, Greg – isn’t this an indictment of our entire American society? Well, you can do whatever you want to us, but I for one am not going to stand here and listen to you badmouth the United States of America. Gentlemen!”
Okay, here is my Otter argument in a nutshell.
OOH growth is predicated on growing our audience. (I know I could take the other side of that one too…things like analytics bla bla bla will allow us to price up). If our audience does not grow, we can not grow our prices (at least for very long). As we know in our industry, there are only three ways to grow: 1. increase supply. We know how hard that is. 2. increase occupancy. Yes, but this is cyclical. 3. increase price. If you have read some of my past articles, I am a huge believer in the fact that we grossly under-price our product. But in a world in which the audience we deliver flattens or declines…headwinds may be upon us.
Securities transacted through StillPoint Capital Member firm FINRA/SiPC