Will U.S. Permanently Own Fewer Cars, Drive Less? Could Be

October 17, 2011
Car shopping

Car shopping

There's good news and bad news for the auto industry. The good news is that car companies are leaner and meaner than they once were, and auto sales are slowly rebounding. The bad news? Fewer people want cars.

According to Citigroup analyst Itay Michaeli, Americans own fewer cars and trucks than they did just a couple of years ago. In all, the U.S. has seen a net loss of 2,000,000 vehicles since 2008. 

Where did all those vehicles go? Cash-for-Clunkers took slightly more than 690,000 off the road, but the rest have likely been destroyed in accidents or simply retired. And even though consumer spending is up, shoppers aren't rushing back into showrooms. They're making do with the cars they have.

Perhaps the slow sales are just a product of the shaky economy, meaning that customers should return as the economy smooths out. But Michaeli's statistics might also be attributable to something we've mentioned before: younger shoppers simply aren't as interested in cars as their parents are. Combine that consumer unease and Gen Y disinterest with the fact more people are living in cities and have access to public transportation, and you've got a long-term recipe for declining auto demand.

But car fans needn't panic just yet. These grim predictions don't mean that everyone's suddenly ditching cars and hopping into EN-Vs. U.S. automakers will continue selling vehicles, but they may not sell them in the volume they once did. Instead of moving 15,000,000 vehicles a year  -- which many consider the magic number for prosperity -- automakers may sell 12,000,000 or 13,000,000. That's enough to survive, though not thrive.

What's the solution? Michaeli suggests that automakers follow Hyundai's example and offer job-assurance programs. Hyundai Assurance was hugely successful and may explain why the automaker has been doing so well in the U.S. in recent years. According to Michaeli, programs like Assurance don't cost dealers anything upfront, like an incentive would, and if Hyundai's record is anything to go on, the number of actual returns will be underwhelming.

We'd like to know your plans, though. Do you intend to buy a new car soon? Or will it be used? Or will you stick with the one you've got? Or are you hoping to bite the bullet and go completely car free? Drop us a line, or post a comment below.

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