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According to consulting firm A.T Kearney, the U.S. auto industry is recovering nicely, and will sell 13.2 million new units this year, 15.2 million units next year and 16 million units in 2013. That’s nearly the same amount of annual business that automakers saw in the pre-recession, pre-real-estate-collapse days of 2006, and the Kearney study points out that sales will be driven by pent-up demand and easing credit restrictions.
If you’re a “glass-is-half-full” type, and you believe that the economy is well on its way to recovery, stop reading now.
On the other hand, a second study by Itay Michaeli, Citi Investment Research auto analyst, shows that sales won’t top 14.5 million units in 2013. Michaeli’s data shows that Americans are retiring old vehicles, without buying new replacements, and that’s something that has never occurred in the past. Michaeli himself is philosophical about it, saying, “Essentially, society accumulated too many vehicles over the past several years for which it is now correcting.”
How bad is the “correction” that Michaeli refers to? Since 2008, Americans have scrapped some 2.1 million more vehicles than they’ve replaced with new ones. In 2006, there were 1.18 cars for every licensed driver in the United States. Today, there are 1.14 cars per driver, but Michaeli expects this to drop as low as 1.04 cars per driver. Perhaps most telling of all was a direct question on Michaeli’s latest survey: when asked if they expected to have more vehicles or fewer vehicles in household over the next two years, 10 percent of respondents said more, while 14 percent said less. That's the largest gap since Michaeli began collecting data in March of 2010.
This much is certain: both studies can’t be right, and neither one factors in the current state of U.S. employment. Consumers may want a new car, but unless they’ve got a steady and somewhat secure income, it’s unlikely that they’ll be new car shopping any time soon.
Michaeli summed this up best by saying, “The recession has weighed on their long-term view of how prosperous their lives will be.”
Prosperity, it seems, no longer involves owning multiple cars.