Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Long Ideas

Singapore Limits number of Cars in City

No additional cars will be allowed in Singapore after February 2018. The authoritarian city-state plans to cap the number of vehicles on the road at the present level of 600,000, CNN reported.

Currently, Singapore’s Land Transport Authority allows the volume to increase at a minuscule rate of .25% a year, Bloomberg reported. The rate of increase will drop to zero in February because there simply is not enough room for extra vehicles in the island nation.

Interestingly enough all vehicles including motorcycles will be restricted. That means a Singapore resident will only be able to become a car owner if somebody else gives up their vehicle or a driver dies or moves out of town.

A Growing Trend of Vehicle Restrictions

Singapore is only the latest in a growing number of congested cities to try and restrict vehicles. London is planning a £10 ($13.17) charge for older vehicles, while Paris has banned many older vehicles completely, The Guardian reported.

Photo taken on December 1, 2010 shows vehicles plying along central expressway in Singapore. Singapore prides itself on being a clean and green city but a high-consumption lifestyle resulting from a booming economy has made it one of the world’s biggest carbon polluters per person.AFP PHOTO/ROSLAN RAHMAN (Photo credit should read ROSLAN RAHMAN/AFP/Getty Images)

Singapore has the advantage of authoritarian rule, which makes restricting cars easier. Governments in more democratic nations are using fees or parking restrictions to achieve the same end. In London and Paris pollution largely caused by diesel engines is driving restrictions.

Expect to see many more cities all over the world offer such restrictions in the future. American cities likely to experiment with them include New York, Los Angeles, San Francisco, Honolulu, and smaller communities such as Boulder, Colorado.

Boon for Ride-Hailing and Rental Vehicles

Potential corporate winners here include rental car companies; like Hertz (NYSE: HTZ), and Avis Budget Group (NASDAQ: CAR) and ride-hailing services such as Didi, Lyft, and Uber. Also standing to gain are tech companies such as Alphabet (NASDAQ: GOOGL) parent of Waymo, and vehicle makers such as Fiat Chrysler (NYSE: FCAU), General Motors (NYSE: GM) and BMW (OTC: BMWY) which have been experimenting with ride-hailing services. GM’s Maven and BMW’s ReachNow will be the models for such services.

These companies stand to gain because more governments will move to force citizens to share rides or rent vehicles. Simple lack of space in many cities all over the world guarantees that restrictions on vehicle ownership will soon be a fact of life all over the world.

Governments may help predictions that automakers will shift from vehicle builders to transport providers a reality.