If you listen to the automakers, everything is rosy with the United States economy, and we’ll soon be back to the pre-crash days of bloated stock portfolios, valuable real estate and affordable financing for purchases like automobiles. A new study conducted by Citi Investment Research auto analyst Itay Michaeli (and backed by research from R.L Polk) seems to indicate otherwise, and better reflects the reality that most of us are living in post-crash America. Per Michaeli’s study, Americans are scrapping old cars at a much higher rate than they’re replacing them, and that doesn’t bode well for continued growth in the automotive sector.
Since 2008, 2.1 million vehicles have been scrapped without replacement. Americans are buying fewer cars and families are cutting back on the number of vehicles owned. The study doesn’t cite reasons, but they’re obvious enough: owning a car costs money for things like maintenance, insurance and gas, and most Americans have little disposable income these days. Families that once owned a status vehicle or a sports car are now getting by without, and that fact is illustrated by the number of cars per driver in the United States. In 2006, the peak of the housing bubble, Americans owned 1.18 cars per driver; today, that number has declined to 1.14 cars per driver and Michaeli believes it won’t bottom out until it hits 1.04 cars per driver. That yields sales of around 14.5 million units in 2013, some 1.5 million units less than predicted by more optimistic studies.
I fall into the “fewer vehicles” category myself, and I’m actually looking to downsize further. In 2006 I owned a motorcycle, a sports car and a sensible sedan, while my wife drove a station wagon. Today, the bike is gone and we’re selling off the sedan and the sports car, to be replaced by a practical-but-fun hot hatchback. We’ve gone from 4 vehicles between us down to 2, and that doesn’t leave any room for further cutbacks. What’s your situation? Do you own fewer vehicles today than you did five years ago? In the next 12 months, do you expect to add a vehicle, stay the same or cut back on the number of vehicles you own?
Source: Left Lane News