Global passenger car penetration: Grid lock!

Population density and growing congestion could limit growth in vehicle penetration.

Usage rates are likely to peak at levels significantly below the developed world. We believe consensus forecasts are too optimistic about the long-run growth in emerging market car fleets. The implications for oil demand could be significant as forecasts become increasingly sensitive to the rate of electric vehicle adoption.

The future of the global car fleet

In our previous fundamentals “Whatever happened to peak oil?” we highlighted the implications of peak oil demand on global energy markets. Overly-optimistic fuel efficiency improvements assumed in oil demand forecasts led us to draw the conclusion that peak demand is still some way off. Notwithstanding potential volatility in the short to medium term, oil producing companies and countries should remain a credible counterpart in the opportunity set for long-term investors.