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Vehicle Ownership and Income Growth, Worldwide: 1960-2030

Abstract:
The speed of vehicle ownership expansion in emerging market and developing countries has important implications for transport and environmental policies, as well as the global oil market. The literature remains divided on the issue of whether the vehicle ownership rates will ever catch up to the levels common in the advanced economies. This paper contributes to the debate by building a model that explicitly models the vehicle saturation level as a function of observable country characteristics: urbanization and population density. Our model is estimated on the basis of pooled time-series (1960-2002) and cross-section data for 45 countries that include 75 percent of the world�s population. We project that the total vehicle stock will increase from about 800 million in 2002 to more than two billion units in 2030. By this time, 56% of the world�s vehicles will be owned by non-OECD countries, compared with 24% in 2002. In particular, China�s vehicle stock will increase nearly twenty-fold, to 390 million in 2030. This fast speed of vehicle ownership expansion implies rapid growth in oil demand.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Energy Modeling – Other

JEL Codes:
L13 - Oligopoly and Other Imperfect Markets
C59 - Econometric Modeling: Other

Keywords: Vehicle ownership, transport modelling, transport oil demand, energy and environmental policy

DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No4-7


Published in Volume 28, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.