New Car Sales As a Function Of Affluence

[tabs]

"The average car in the US is appx 9.5 years old. The average age has moved up with the collapse in new car sales. New car sales fell appx -36% YOY in the Oct 08-Feb 09 period." JYL


This is another example of America becoming less affluent. There is an attrition rate of cars that are scrapped every year, as they wear out. The US has for years sold approxiately 14M cars per year, as of late that rate has gone down to about 9M units. GM was of the belief that there is a pent up demand as the attrition rate will require that new cars will be purchased and the number of units sold will have to make up for that attrition.

So while the pent up demand will require that new cars sales will increase it is a fallacy to think that will be sustained. Once the attrition rate is caught up with, people will repair or buy a used second car instead of new thus the age of the fleet will increase. While the population increases new car sales will increase but instead of climbing to previous levels of per ca pita consumption it will in actuality go down.

[onewhippedpuppy]

Maybe if Americans quit treating their cars as disposable maybe they wouldn't all be broke? Correct me if I'm wrong, but don't Europeans (on average) keep their cars far longer than Americans?

[The Gaijin]

The average European car is a bit newer. Tougher inspection regimens apparently.

Most cars on Japanese roads are within 5 years old.. That is industry lobbied government policy - got to keep driving the new stuff.

Besides - frugal is the new cool..

[dd74]

Volvo once had an ad that claimed the average Volvo lasts 17.5 years.

Europeans truly invest in their cars.

My grandfather would buy a new car every two years.

The problem is, with so much complexity engineered in new cars, I don't see how they can hold up longer than ten years.

But watch: someone will try to pass a law in this country where a car over ten years old will be deemed unsafe or not economical and thus it will have to be taken off the road.

Don't think it might not happen.

As for our old Porsches, easily any state might make it so our old cars can no longer be registered.

I wouldn't put such a law past California.

[tabs]

Owning a car in Europe is a luxury. In America partially due to the distances traveled it is a necessity. In America the number of cars per household will start to decline as the attrition rate starts to take its toll.

[tabs]

Yo DD that road has been traveled before. In CA cars that are pre 73? don't need to be smogged as they are considered to be of special interest. That number and number of miles traveled with those car is relatively small.

It will be those 15 year old cars that have fallen into disrepair that will fall victim. Again this is a regressive scheme as it is the less affluent in society that can not buy the newer cars.

Americans will tend to have one new car and one older car, instead of 2 new ones. Over time even that second car will start to disappear.

[Noah930]

Originally Posted by dd74

As for our old Porsches, easily any state might make it so our old cars can no longer be registered.

I wouldn't put such a law past California.

The way I drive the Porsche, now, I'm already on the verge of outlaw status. What's the biggie if they pull the registration? I'll just have to run it in the canyons at night with no lights on.

[tabs]

There is also something to be said that to keep the number of units produced up, the shelf life of that unit must decline. To keep the economy growing the unit must decline in quality, thus becoming more and more of a disposable commodity. This increases the strain on the environment as the resources and energy used to mfg those ever increasing units continue to increase. Can not have it both ways...

[The Gaijin]

Had a 1990-something Olds 98 that got amazing MPG. We were really doing well by that era with decent sized cars that got great mileage.

But then cheap gas persisted - the politicians could not see to raise the taxes to raise the price to keep usage (and imports) low - then the SUV craze kicked in, the China and India economies went wild - then oil went to $150 a barrel - it all collapsed - and it's now starting all over again...

[tabs]

$150 oil was a speculation bubble...Wall Street to continue to reap the profits they were making moved from the RE subprime market to commodities. When the Sub Prime hit the fan, the Wall Street Boyz were forced to liquidate assets to keep their capitalization rates up. Thus they sold off commodities...Oil went form 150 to 35 in a matter of a couple of short months...

[tabs]

The government in order to keep the institutional investors (Public, Private, Union Pension Plans and College endownments) from going BK have tried everything in their power to reinflate this economy.

So even if the ship that is the economy has had the bottom ripped out of it, the govt will mend it to keep it form sinking to the bottom of the ocean.

[The Gaijin]

Demand for imported oil has gone up - even more than population growth in the past few years. Many, many things could have been done differently since 1973 drive and keep down imports.

All that money flowing out to those that like us least - for what? Overheated and over-cooled mega-malls, McMansions and dofus SUVs. Please.

[tabs]

Ironically many of the SP500 corporations are in good shape and have large amounts of cash on their balance sheets. Yet with the financial sector having a massive Heart Attack with the fall of Lehman the cash flow or lifes blood of the system came to a screeching halt which caused a ripple through the economy.

The fall of the Stock Market was and is a case of throwing the baby out with the bath water. The panic was if the lifes blood of the economy has stopped then the value of those companies will be less because of less business being done. This is totally a CRISIS OF CONFIDENCE in the financial system as we know it. As the USD says, "The full faith of the US government"

[pwd72s]

Perhaps it's changes in attitudes as well. Our 1999 Ranger is at the 52,000 miles mark, still runs well, has given us few problems over the years...why should I buy a new something or other?

Cars are losing their role as "status" items these days...I mean, outside of the diminishing in numbers "car guy" circles, few people give a damn about what the other person drives. Back in the 50's, it was a big deal whenever a neighbor bought a new car...all the dads would gather around, discussing the new model machine.

[tabs]

Originally Posted by pwd72s

Perhaps it's changes in attitudes as well. Our 1999 Ranger is at the 52,000 miles mark, still runs well, has given us few problems over the years...why should I buy a new something or other?

Cars are losing their role as "status" items these days...I mean, outside of the diminishing in numbers "car guy" circles, few people give a damn about what the other person drives. Back in the 50's, it was a big deal whenever a neighbor bought a new car...all the dads would gather around, discussing the new model machine.

Her in LV I drive LESS THAN 500 miles a month..6000 a year...so my 98 F150 will do for years to come. It is depreciated out, and if gas goes back to $4 or more, I could park it by the side of the road, walk away and not lose anything. So why would I buy a new one for 20K plus and not be able to get rid of nor drive at $4 plus gas?

As I have said so many times before we are coming into an age of austerity which I have called a Secular Round Head Revolution. The age of keeping up with the Jones is over, it is a matter of the Jones surviving and being able to pay the bills.

[dd74]

I meet fewer and fewer car guys these days. But c'mon, really. What's interesting about new cars anyway? An air-cooled 911, a '69 Camaro, a '73 Dino, a '71 Cuda - those were cars with style and presence. Those cars demanded interest.

[DasBoot]

Originally Posted by dd74

But watch: someone will try to pass a law in this country where a car over ten years old will be deemed unsafe or not economical and thus it will have to be taken off the road.

Don't think it might not happen. I wouldn't put such a law past California.

It's already happening in Calif. via "smog-checks". They stopped the rolling cutoff-date (1976), so no matter how old your car gets, you'll still have to get it smogged. Then, each year they tweak the "standards" a little less in favor of older cars, forcing some to be removed from the road and labeled "gross polluters".

[Jim Richards]

Originally Posted by tabs

Americans will tend to have one new car and one older car, instead of 2 new ones. Over time even that second car will start to disappear.

Only once the little lady moves back into the kitchen...but, don't hold your breath waiting that to happen.

[tabs]

Originally Posted by Jim Richards

Only once the little lady moves back into the kitchen...but, don't hold your breath waiting that to happen.

Then they might both be driving older used cars..didja ever think of that?

[Jim Richards]

Sure. But that's not what you said tabby.

Originally Posted by tabs

Americans will tend to have one new car and one older car, instead of 2 new ones. Over time even that second car will start to disappear.

I hang on your every word, you know.