It was recently reported by Automotive News that 11.4 years is the average age of the American car today (see: Automotive News– Link). This is a new record. People are keeping their cars longer in the U.S.A. This average auto age in America has continued to rise and set new records for eleven consecutive years according to Mark Rechtin, a writer for Automotive News.
CNBC recently reported that 20% of American cars still on the road today are 16 years old or older.
Why do we see this situation in the auto industry today?
Could it be that lots of people are unemployed or afraid of becoming unemployed? Could it be that the eleven million plus jobs that we have exported to Mexico and China have left millions of American’s permanently unemployed and unable to buy a new car? Could it be that the jobs we are creating in America today pay too little to enable people to buy new cars?
Are boomers frightened that they won’t have enough money for retirement, so they are working on savings instead of buying new cars? (See: How Government Will Rob your Assets and Leave You With an IOU–Link)
Could it be that recent college graduates have so much school debt that they can’t afford a new car payment? (See: Student-Loan Debt Saddles Generations With Debt– Link)
Could it be that wages haven’t kept up with car prices? Have car prices advanced at a much faster pace than wage have increased (and for many wages are decreasing)? We hear there is very little inflation. Do you believe you’ve seen and continue to see auto price inflation? I remember buying a new Toyota Corona Deluxe in 1970 for $2,400.00. Try buying a new Toyota for that now. Granted they are better cars now, but I was able to drive that car for 120,000 miles before selling it for about 1/2 what I paid for it. (See: How Inflation Has Affected The Price of Cars–Link)
Could it be that the dollar is becoming so worthless because of all the “quantitative easing” and bailouts and deficits that auto makers have needed to raise prices to account for that dollar worthlessness and the concurrent inflationary price increases from suppliers and labor?
Could it be that recent payroll tax increases and other tax increases at the local, state, county and federal levels have decreased the purchasing power of the American auto buyer so much that they must just soldier on with the old car they have and “make do”?
Even the artificially low interest rates created by Federal Reserve tinkering has not been able to coax American car buyers off the sidelines in the numbers we saw in decades past. Of course boomers are aging, and it may be that they have slowed their buying as they finally came to realize that buying a new car every other year was not a good investment. Every time you drive a new car off the dealer’s lot you take a huge hit in value. It immediately becomes a much less valuable “used car.” Perhaps boomers and others have realized they would rather have appreciating assets or income producing assets instead of a rapidly depreciating new car.
Under the big government, big spending regimes the Democrats and the Republicans have given us, Americans are feeling more and more broke. In fact, they have become less wealthy in real terms over the last several decades, especially when we factor in the $100 trillion plus of unfunded debt and commitments their Federal government has signed them up for and the dilution of the Federal Reserve Note.
Could it be that Americans are afraid that the government socialist Ponzi schemes of Social Security and Medicare will somehow default in one way or another on the promises that were made? Could it be that they are afraid that their pension plans are all lies? Could it be that Americans are hunkering down because of the corruption they see in government and in corporate America?
Could it be that Americans see the endless U.N. Wars that our nation is involved in and the constant drumbeat out of Washington that wants to expand those wars? Could it be there is a fear in America today that we may already be fighting World War III and for this reason would-be-American-auto-buyers are simply tightening their belts and hunkering down to prepare for disaster? (See: Will Obama Start WWIII by attacking Syria?– Link
Are Americans weary of borrowing and spending on things like homes and cars and stuff from Wal-Mart, Target and the like? Are Americans tired of paying such a high percentage of their income in interest on their credit cards, cars and homes? Have Americans decided to deleverage and get out of debt and stop paying interest? (See: How to Deleverage And Get Out of Debt Now– Link)
Auto makers and dealers are so embarrassed by their retail auto prices that they rarely advertise anything but the lease payment. Their advertisements reek of subterfuge. While they advertise the lease payment they hope you won’t notice the huge down-payment required to access that advertised payment. Is it any wonder that Americans are driving their cars longer and buying fewer new cars?