Use access key #2 to skip to page content.

devoish (98.76)

Cars scrapped exceeded new car sales in 2009 for the first time since World War II,

Recs

5

February 12, 2010 – Comments (11) | RELATED TICKERS: TM , F , NSANY.DL

Can China replace tha USA? Not if we are not buying Chinese made car parts to fund them, and they tighten credit to cool growth. 

Repairers and parts purveyors would be wise to brace for a shrinking national motor pool, according to a study released in January.

Cars scrapped exceeded new car sales in 2009 for the first time since World War II, shrinking the U.S. vehicle fleet from the all-time high of 250 million to 246 million. “It now appears that this new trend of scrappage exceeding sales could continue through at least 2020,” says EPI President Lester R. Brown.

“America’s century-old love affair with the automobile may be coming to an end,” he observes. “The U.S. fleet has apparently peaked and started to decline.”

Last year the 14 million cars scrapped rose above the 10 million new cars sold, reducing the fleet by 4 million, or nearly 2 percent, since 2008’s levels. “While this is widely associated with the recession, it is in fact caused by several converging forces,” Brown reports.

Among the trends keeping sales well below the annual figure of 15 million to 17 million that prevailed from 1994 through 2007 are market saturation, ongoing urbanization, economic uncertainty, oil insecurity, rising gasoline prices, frustration with traffic congestion, mounting concerns about climate change, and a declining interest in cars among young people, according to the study.

Market saturation may be the dominant contributor to the peaking. The U.S. now has 246 million registered motor vehicles and 209 million licensed drivers – nearly five vehicles for every four drivers.

11 Comments – Post Your Own

#1) On February 12, 2010 at 1:25 PM, rd80 (99.11) wrote:

Surprising that the author doesn't mention anything about the impact Cash for Clunkers had on scrap rates and new car sales.

Report this comment
#2) On February 12, 2010 at 1:38 PM, devoish (98.76) wrote:

rd80,

That was my first thought too.

Possibly because for every car sold there was one car scrapped in C4C. Both scrap rates and new car sales would have been lower without it, maybe enough to tweak those numbers, but not enough to change the message?

Report this comment
#3) On February 12, 2010 at 1:39 PM, brickcityman (< 20) wrote:

Also I would question just what vehicles are included here...  Do motorhomes and RVs count? I would be a number of people were looking to dump them...

 

What about tractor-trailer rigs?  If you believe the commercials about a revival in rail replacing trucking then that might be playing into this...

 

and also, perhaps most importantly...  demographic shifts associated with boomer retirement may mean paring back on the number of autos used by a given household.

Report this comment
#4) On February 12, 2010 at 1:48 PM, Turfscape (41.28) wrote:

Well, I'm not terribly surprised. I scrapped an old car. I wanted to replace it, but there was no value out there! I couldn't find a car that met my needs for performance, size/storage, and price. At that point, it made more sense for us to become a single-car family.

If any automaker was able to provide a suitable car for a family with 2 kids that gets gas mileage above 30MPG without costing over $25,000, I would've been interested.

Prius came close, but the Toyota dealers in the area were selling them above MSRP because demand was high. And, ultimately a Prius would've been settling because there really isn't enough trunk space to take 2 young kids on vacation for a week (gotta fit a stroller in there along with luggage). Interior space was nice (headroom and legroom) but just a touch too small. And MSRP would've actually been $27K, I believe.

Automakers, pay attention!

Report this comment
#5) On February 12, 2010 at 2:23 PM, FleaBagger (33.08) wrote:

#2. Any time you add something at a 1:1 ratio, it has a big impact on an uneven ratio. Observe:

7:10  -  70%

8:11  -  72.72~%

9:12  -  75%

10:13 - ~77%

So adding less than 50% to one side and 30% to the other side, in even absolute amounts, increased the lesser side of the ratio to 10% more of the total.

And, if C4C would have had a noticeable impact on the total cars sold, it would be notable for having catalyzed us reaching vehicle saturation.

However, the reason C4C isn't significant to the story has more to do with the fact that it only accounted for about 7% of new car sales for the year, and only 5% of the scrappage.

Report this comment
#6) On February 12, 2010 at 3:41 PM, rofgile (99.00) wrote:

I don't think the conclusions of:

“America’s century-old love affair with the automobile may be coming to an end,” he observes. “The U.S. fleet has apparently peaked and started to decline.”

Is justified.

As pointed out:

A) We had a period of people postponing large purchases, which is actually still on going.  Maybe people want or need a car - but they'll wait till they have more confidence that they won't need $4000 on hand for their mortgage because they could lose their job. 

B) Cash-for-clunkers led to large scrapping of cars in 2009 in the program.

C) Municipalities are likely holding off like consumers on buying cars for police fleets, etc - because they are running tax shortfalls and deficits.

---

 What I could see long term, is that cars might start having longer mileage lifetimes - this could affect car purchasing in a negative way in the long term.  This could be balanced by higher fuel efficiency or safety standards.  My conclusion?  The car market is in a downturn but will bounce back to year 2003-5 levels after jobs return.

 -Rof

Report this comment
#7) On February 12, 2010 at 4:13 PM, Turfscape (41.28) wrote:

rofgile wrote:
"The car market is in a downturn but will bounce back to year 2003-5 levels after jobs return."

I'm not sure I agree. I don't think I'm an anomaly in the consumer space. My househhold downsized to a one car family. I haven't looked back. I'm rather enjoying the freedom that comes from NOT driving everywhere, everyday. Not only am I spending less on insurance, gas and maintenance...but there are a lot fewer "quick trips" to the store for things that aren't truly necessary.

I have a feeling that a not insignificant section of the population is experiencing something similar. The gas price peaks and economic downturn have opened some eyes to what is really needed for daily life. I can afford a new car. My job is stable. The auto industry doesn't offer what I want, but even if they did...I really think we'd stay a one-car family for now.

Report this comment
#8) On February 12, 2010 at 4:15 PM, devoish (98.76) wrote:

All good points.

Maybe from having 5 cars for every 4 drivers, we really are shifting to a model of 1 car for 2 drivers.

http://www.zipcar.com/?redirect_p=0 

I have 17 year olds in the suburbs, and many of them are choosing not to get licenses or drive, before they go off to college.

Not my kid, not most of them, but a notable number.

Report this comment
#9) On February 12, 2010 at 8:44 PM, Imperial1964 (97.93) wrote:

As usual, I buck the trend.

I have a barn full of cars that would have been scrapped if it weren't for me.  Though, I've never bought a new one--or even close.

I drive 3 cars (all antique, though only the '52 and '64 turn heads.  The '85 I drive to work does not), a truck, and a motorcycle, being the newest of them all

Guess what?  My '85 got me 24 MPG on the last tank, in 30 degree temperatures, and I drive rather hard.  And it's a full-size.  Yet some people look at me like I'm killing the planet.  How much fossil fuel do people think would take to melt my car down and manufacture a couple of Toyotas?

Anyway,  I guess what I'm getting at is that people don't need new cars. And I think they are realizing it, though cash-for-clunkers pulled forward a certain amount of demand.  I just wonder how much demand we will have going forward.

My '85 is still running like new after 25 years and 250k miles.

Report this comment
#10) On February 12, 2010 at 11:08 PM, devoish (98.76) wrote:

Imperial,

I agree with you. And I promise not to look at you like you are killing the planet.

Plus new cars are not coming down in cost. It is getting harder and harder to pull iron and copper out of the ground, and the cost of transportation will climb unless the driving population drops first.

Besides we are in debt. We do not have enough qualified buyers to return to 2006 buying levels anymore.

Report this comment
#11) On April 19, 2010 at 8:19 PM, BrandonPaulChevy (< 20) wrote:

Well, we can't expect that car sales will dominate over scrapped cars since we are still experiencing global economic recession. My old car was scrapped but still parts like the valves, the water pump, etc still works pretty well. So what happened was a buyer bought it from me and he re assembled a car. he wasted minimal amount reconstructing his car unlike buying a new one.

Report this comment

Featured Broker Partners


Advertisement