While last summer's Cash for Clunkers program appears to have accomplished many of its goals, car and light-truck sales are still far from returning to where they were just a few years ago. In fact, just months ago, the U.S. was scrapping more vehicles than were sold.
R.L. Polk & Co. studied the 15-month period from July 1, 2008--just before the auto market plunged precipitously--through September 30, 2009, roughly one month after the Cash for Clunkers program had ended.
Consumer data from Maritz study on Cash For Clunkers program results, March 2010
Cash for Clunkers banner with Mercury Sable, Albany, New York
During that period, 13.6 million new vehicles were registered, but 14.8 million were taken off the road and scrapped. Before 2009, the last time the scrappage rate exceeded the sales rate had been just after World War II.
U.S. drivers are keeping their vehicles longer than ever before, with the average being just under 50 months. And the vehicle pool is continuing to age; the average vehicle on the road was slightly more than 10 years old during the period studied.
Because of that aging, scrappage rates are expected to stay high as more vehicles are retired. In 2005, 4.3 percent of the vehicles on the road were scrapped, while that rate has risen to 6.1 percent by the time of the study.
While estimates vary considerably, and are still susceptible to everything from oil-price spikes to Toyota's huge incentive program, most analysts see U.S. sales volumes gradually returning to 11 to 12 million units for 2010, and perhaps as high as 14 million units by 2012.
By comparison, roughly 17 million vehicles were sold in 2007, a level that is not likely to be reached again for several more years.
[R.L. Polk; Automotive News (subscription required)]