Living Car Free - US car fleet shrank by 2 percent in 2009

An article today from the Earth Policy Institute:

http://www.earth-policy.org/index.php?/plan_b_updates/2010/update87


...In 2009, the 14 million cars scrapped exceeded the 10 million new cars sold, shrinking the U.S. fleet by 4 million, or nearly 2 percent in one year. While this is widely associated with the recession, it is in fact caused by several converging forces.

...market saturation, ongoing urbanization, economic uncertainty, oil insecurity, rising gasoline prices, frustration with traffic congestion, mounting concerns about climate change, and a declining interest in cars among young people.

...despite the largest U.S. teenage population ever, the number of teenagers with licenses, which peaked at 12 million in 1978, is now under 10 million...

Yeah, the automobile industry is hurting.

My commute takes me down one street with 13 automobile dealerships. Two were closed when I started commuting and in the past 8 months, 8 others have shut operations, leaving 3 used car dealers remaining.

This is probably just the beginning of the change over from everyone having a car back to just a few having cars....like it was in the '20s and 30's.

I think it's just a blip in the statistics. New car sales for 2010 are projected at 12.5 million in the US, which is still a little on the low side. (I think the record is around 14 million, IIRC.) Also, the figures would be probably look different if you looked at worldwide car sales instead of just US sales.

Everybody is going to be replacing their cars as soon as they can, as the economy improves. I don't think the fleet size will go down permanently until two things happen: more expensive fuel and better public transit.

Cash for clunkers took alot of driveable cars out of the system.

Cash for clunkers took alot of driveable cars out of the system.

I'm not so sure, for every one that was removed, another was added.

However, it did make the cars existing generally newer, and harder and more expensive to fix. ;)

I'm not so sure, for every one that was removed, another was added.


The new cars sold were already in inventory.

A normal auto life cycle goes from new to being traded in, then sold again as a used car, then scraped for parts. The cash for clunkers program removed the traded-in vehicles from the used car supply altogether.

I don't attribute it for much of the "shrinkage" but it was an exceptional occurance that had an net impact that took more cars out of the system than it added.

With some economists predicting that many of the job losses in the US will be permanent, one wonders just what economic recovery will look like. Personally, I suspect we may see big oil and the commodities markets pushing the price of crude oil back up into territory that will inflame world-wide inflation this summer. If we see gasoline back up to $4.00 USD a gallon or more, don't be shocked to see double-digit inflation and an up tick in job losses again. As for China and India, they both have nascent middle classes, but if the primary target for their goods, the US consumer, is financially strapped for more than 3-4 years, they may be hard pressed to keep their economies from starting to stall. I do expect to see China pushing Europe to open it markets up to more imports to make up for the loss of sales to the US.

With some economists predicting that many of the job losses in the US will be permanent, one wonders just what economic recovery will look like. Personally, I suspect we may see big oil and the commodities markets pushing the price of crude oil back up into territory that will inflame world-wide inflation this summer. If we see gasoline back up to $4.00 USD a gallon or more, don't be shocked to see double-digit inflation and an up tick in job losses again. As for China and India, they both have nascent middle classes, but if the primary target for their goods, the US consumer, is financially strapped for more than 3-4 years, they may be hard pressed to keep their economies from starting to stall. I do expect to see China pushing Europe to open it markets up to more imports to make up for the loss of sales to the US.

Yup and for those of you that follow peak oil we are heading back up again, one of the price swings I assume. Gas is up around 12 cents a gallon in the past 2 weeks. For every dollar gas goes up you take that much out of the US economy for purchasing other items.

Aaron:)

Probably the biggest unknown factor is whether or not our new-found frugality is going to stick around. I feel very safe in saying that the majority of Americans do not like living like my late father (Depression-era child and WWII vet) taught us to live. If said frugality does hang on and become the new reality, then you're going to see car ownership drop quite a bit more.

Don't count on the car going away, however. Now that we as a society are well used to have individual use of a motorized vehicle powered by something other than our own muscles, we sure aren't going to give them up without a fight. Said vehicle is going to radically change in form, weight and power source . . . . . . . but nobody will ever mistake it for a bicycle.

DIE CARS DIE!

http://popup.lala.com/popup/504684659306323066

Good article.

The writer never mentioned probably the most important reason people are not buying cars in numbers like before. It's just getting too expensive to lease or buy a new car! Millions have lost their jobs, homes, life savings and retirement funds so where's the money to buy a new car? The days when you could take a reverse mortagage from your home for a new vehicle are over.

I do expect to see China pushing Europe to open it markets up to more imports to make up for the loss of sales to the US.

I don't think the Europeans are stupid enough to do what we did in opening our markets resulting in millions of manufacturing jobs losses. Europe protects their industries with VAT on imported products and they are not about to give up that income for what? Cheap Walmart goods?

I just cannot see Europe after watching the U.S. lose 30% of it's manufacturing capacity in the past 10 years want to head down that path.

With some economists predicting that many of the job losses in the US will be permanent, one wonders just what economic recovery will look like. Personally, I suspect we may see big oil and the commodities markets pushing the price of crude oil back up into territory that will inflame world-wide inflation this summer. If we see gasoline back up to $4.00 USD a gallon or more, don't be shocked to see double-digit inflation and an up tick in job losses again. As for China and India, they both have nascent middle classes, but if the primary target for their goods, the US consumer, is financially strapped for more than 3-4 years, they may be hard pressed to keep their economies from starting to stall. I do expect to see China pushing Europe to open it markets up to more imports to make up for the loss of sales to the US.

Two questions:

Why didn't we have inflation in 2008 when gas prices topped $4.00?
I've read that China is efficiently switching over to a domestic consumption economy--mostly by building infrastructure for cars. Is this not true?

We did have inflation in 2008, especially on food.

I don't think the Europeans are stupid enough to do what we did in opening our markets resulting in millions of manufacturing jobs losses. Europe protects their industries with VAT on imported products and they are not about to give up that income for what? Cheap Walmart goods?

I just cannot see Europe after watching the U.S. lose 30% of it's manufacturing capacity in the past 10 years want to head down that path.

You got that right. What few Chinese cars are already for sale in Europe (Brilliance immediately comes to mind - check YouTube if you want to see some horrifying crash tests) haven't made much of a dent. A lot of that has to do with European distrust of the quality of the Chinese product. Part of that concern is very real . . . . . . .

The other part is obviously the Europeans playing very dirty. Granted, the first Brilliance autos had all the crash worthiness of a 1971 Pinto. However, this weakness was exacerbated by the Europeans. While the cars were supposed to go through official crash test by whatever the official testing channels are, the first Brilliance's were immediately crash tested, with no official figures or parameters but LOTS of videotape, by the European car manufacturers themselves.

There's a lot of questioning regarding actual crash speed, test setups, etc., but the videos were promptly put on the Internet with lots of publicity, and by the time the official testing started the damage had been done. Nobody but the terminally suicidal would have considered buying one.

Never underestimate the European ability to protect local unionized jobs.

Two questions:

Why didn't we have inflation in 2008 when gas prices topped $4.00?
I've read that China is efficiently switching over to a domestic consumption economy--mostly by building infrastructure for cars. Is this not true?


We did inflation rate (http://www.usinflationcalculator.com/inflation/current-inflation-rates/) for 2008 was 4%, 2009 was a bit under 2%. But I think those rates are suspect because they often include large ticket items that people don't necessarily buy on a regular basis. Somewhere there is a rate site that takes into account the things that people really buy, like milk, hamburger, gas, tennis shoes and underwear. IIRC it has averaged closer to double the government reported inflation rate for many years.

Then there is hidden inflation. You buy a product for $10 dollars in 2006, three years later that same product is selling for $10 but the quality is half of what it was a few years earlier. That will nearly double the inflation rate for that product.

Aaron :)

A lot of that has to do with European distrust of the quality of the Chinese product. Part of that concern is very real . . . . . . .


I contend with poor Chinese quality/quality control on a daily basis, and a number of our business accounts have now opted to no longer buy any products that we sell that are made in China.

If you were to look at any factor that would reduce the size of the current car fleet, you would have to consider a number of factors, not just the economy. There probably needs to be a "perfect storm" that would finally make this happen permanently.

Consider what is happening in Japan, where a whole generation is saying "No Thanks" to car ownership.

http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/123121951587500.xml&coll=7



To get around the city, Yutaka Makino hops on his skateboard or rides commuter trains. Does he dream of the day when he has his own car? Not a chance.

Like many Japanese of his generation, the 28-year-old musician and part-time maintenance worker says owning a car is more trouble than it's worth, especially in a congested city where monthly parking runs as much as 30,000 yen ($330), and gas costs 100 yen a liter (about $3.50 a gallon).

...

Vehicle sales peaked at 7.78 million vehicles in 1990 during the nation's heyday "bubble" economy. After that burst, Japan was mired in a decadelong slowdown, which squelched consumer spending and sent car sales on a decline. A surge in gas prices, which has subsided in recent weeks, also eroded sales.

"The changes in individuals' values on cars came cumulatively over time," said Nissan Chief Operating Officer Toshiyuki Shiga. "The change in young people's attitude toward cars didn't happen overnight. So we have to keep convincing them cars are great."


Vehicles sales in Japan are now just below 5,000,000 for the first time in 30 years.

i think the key is the price of gas. i noticed in my town that is when novices switched to bikes. i saw people with newly bought bikes making jaunts to town on them. the price of gas is the key that wakes people up to the cost of a car.
personal observation . in my area people are still driving fancy cars even the teen agers that go to high school.
i think in distressed neighborhoods, they are more sensitive to the increasing cost of cars, but in the suburbs soccor moms still drive the big suvs

I've read that China is efficiently switching over to a domestic consumption economy--mostly by building infrastructure for cars. Is this not true?

There are some economists who are convinced China is "cooking the books" to get the results that they want. How China Cooks Its Books (http://www.foreignpolicy.com/articles/2009/09/03/how_china_cooks_its_books). So you may want to take any figures like that with a shaker of salt.

For this forum, it seems apropos that this picture accompanied the article.

http://www.foreignpolicy.com/files/images/Bicycle.jpg

For this forum, it seems apropos that this picture accompanied the article.

Whoever selected that photo is obviously leveraging anti-bicycle prejudice to bolster the author's thesis. These folks are apparently recycling waste construction materials. We just haul that kind of stuff off to the landfill, is that really a better way to dispose of it?

I could take a photo of a local bike shop owner in Austin using his cargo trike to haul boxes and boxes of his paper office waste to the recycling center. Such a picture could be used to insinuate that Austin is an impoverished city, but it wouldn't make it true.

The couple in the photo isn't contributing to all the smog hanging in the air. That's a purpose built cargo trike, look at the 40-spoke wheels. If I wanted to buy an equivalent cargo trike here in the US, I bet it wouldn't be cheap.

By the way, why isn't that guy pedaling?

Not mentioned in this discussion yet was the fact that just prior to the recession, '07 to mid '08,the price of scrap metal was at an all time high.Alot of beater cars that might have otherwise been repaired to get by for just a little longer were scrapped because you could get $400 for them.Probably got alot of non running cars off the government record because VIN# and titles are reported by salvage yards.

Interesting article.... My wife has been unemployed for over a year, my brother too, both their unemployement benes have run out and they were unable to extend their benefits. I was wondering since they they are no longer in "the system" if they are included in the national and state unemployement rate?

I tend to think that they are not included in the unemployment % because they are no longer receiving benefits. If this is the case, the U.S. unemployment rate could be much higher then 10% nationally and the 6.5% here in the state of CO. Point Iam try to make would this be considered a fudging of the unemployement rate?

Could This ^ be the same thing the Chinese labor departement is doing fudging the #'s in the article? I understand that 40-50 million unemployed Chinese is alot, but given a population over 1 billion, 50 million unemployed Chinese would be about 20% unemployement if my math is right.

I think its safe to say just about every American is worried, hurting, etc. I would assume the the Average Chinese family hurting aswell.

Back one less car thing, I sold my truck 6 months ago, since I commute to work now :).

By the way, why isn't that guy pedaling?
Take a look a his chain... then tell me what's wrong with the chainring. There has to be some motor under the load.

There are some economists who are convinced China is "cooking the books" to get the results that they want. How China Cooks Its Books (http://www.foreignpolicy.com/articles/2009/09/03/how_china_cooks_its_books). So you may want to take any figures like that with a shaker of salt.

Thomas Freidman had a column in the NY Times about this very topic. Apparently well-know stock shorters are claiming that China is the next Enron, one of the world's most accomplished book cookers.

http://www.nytimes.com/2010/01/13/opinion/13friedman.html

The couple in the photo isn't contributing to all the smog hanging in the air. That's a purpose built cargo trike, look at the 40-spoke wheels. If I wanted to buy an equivalent cargo trike here in the US, I bet it wouldn't be cheap.

By the way, why isn't that guy pedaling?

It could be that his sprocket is so out of whack that the chain came off. :crash:

Thomas Freidman had a column in the NY Times about this very topic. Apparently well-know stock shorters are claiming that China is the next Enron, one of the world's most accomplished book cookers.


Yep. I've been shorting.
I've felt for a long time that Communist + fiat money = disaster.

Interesting article.... My wife has been unemployed for over a year, my brother too, both their unemployement benes have run out and they were unable to extend their benefits. I was wondering since they they are no longer in "the system" if they are included in the national and state unemployement rate?

I tend to think that they are not included in the unemployment % because they are no longer receiving benefits. If this is the case, the U.S. unemployment rate could be much higher then 10% nationally and the 6.5% here in the state of CO. Point Iam try to make would this be considered a fudging of the unemployement rate?

Could This ^ be the same thing the Chinese labor departement is doing fudging the #'s in the article? I understand that 40-50 million unemployed Chinese is alot, but given a population over 1 billion, 50 million unemployed Chinese would be about 20% unemployement if my math is right.

I think its safe to say just about every American is worried, hurting, etc. I would assume the the Average Chinese family hurting aswell.

Back one less car thing, I sold my truck 6 months ago, since I commute to work now :).

The unemployment counts all people in the labor force who don't have jobs. Therefore, people who have exhausted their unemployment benefits are still counted, as long as they're available to work. People who have given up on finding a job are not counted, nor are "underemployed" people. The rate would obviously be higher if these people were considered. You can find vzrious estimaztes of the "true" unemployment rate on the internet and in the media.

50 million Chinese is only 5 % of the population.

If you were to look at any factor that would reduce the size of the current car fleet, you would have to consider a number of factors, not just the economy. There probably needs to be a "perfect storm" that would finally make this happen permanently.

Consider what is happening in Japan, where a whole generation is saying "No Thanks" to car ownership.

http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/123121951587500.xml&coll=7



Vehicles sales in Japan are now just below 5,000,000 for the first time in 30 years.

I just read an article that said young japanese people are no longer buying luxury goods (aside from cars). However, the article said that the main reason is that they are working on consignment or as temps. Japanese companies are reluctant to make the commitment of hiring new workers in a bad economy because they have a tradition of guaranteeing lifelong employment to fulltime workers.

I just read an article that said young japanese people are no longer buying luxury goods (aside from cars). However, the article said that the main reason is that they are working on consignment or as temps. Japanese companies are reluctant to make the commitment of hiring new workers in a bad economy because they have a tradition of guaranteeing lifelong employment to fulltime workers.

There's a little bit of that happening in the US lately. My son who has just graduated isn't having much luck landing work and many of his colleagues are in the same boat. None of them are out buying cars either.

The unemployment counts all people in the labor force who don't have jobs. Therefore, people who have exhausted their unemployment benefits are still counted, as long as they're available to work. People who have given up on finding a job are not counted, nor are "underemployed" people. The rate would obviously be higher if these people were considered. You can find vzrious estimaztes of the "true" unemployment rate on the internet and in the media.

50 million Chinese is only 5 % of the population.

Roody,

I would respectfuly disgree,

My wife and brother have exhauated their umeployment bene. and do not report the the labor dept. therefore the labor dept. has know way of knowing if they have been hire or not. ( I do not consider my wife as "underemployed" she has a Masters degree in accounting.) My brother well.......

If they find a job, that statistic would added in the job creation #, which is subtrated by the unemployment statistic. Therefore the U.S. Labor Dept. Does NOT have a true umemployment stat.

I looked up the official Chinese unemeployemnt labor stat. 4.3% (that is what they are telling the world) add the 5% that is infered by the ariticle 40-50 million undocumented workers in (article) and the Chinese unemployment rate is 10% roughly. Which is a mirrors of the U.S. rate!!

The U.S. Economy still drives the world economy.

Thanks for the correction on my math, but I would guess that the Chinese could have a unemployment rate of 20+% and it would not have much effect here in the U.S.

My wife and brother have exhauated their umeployment bene. and do not report the the labor dept. therefore the labor dept. has know way of knowing if they have been hire or not. ( I do not consider my wife as "underemployed" she has a Masters degree in accounting.) My brother well.......
.

"underemployed" I believe typically means that one who is looking for full-time work, is only able to get part-time work.

example- you want to work full-time @ your local quickie mart, but they're only hiring part time. You take the part-time job. you're now "under" employed. At least thats my take on it.

But also, if you are a professional, but can't find work in your profession and take a job at the Quickie Mart, you are also underemployed.

Roody,

I would respectfuly disgree,

My wife and brother have exhauated their umeployment bene. and do not report the the labor dept. therefore the labor dept. has know way of knowing if they have been hire or not. ( I do not consider my wife as "underemployed" she has a Masters degree in accounting.) My brother well.......

If they find a job, that statistic would added in the job creation #, which is subtrated by the unemployment statistic. Therefore the U.S. Labor Dept. Does NOT have a true umemployment stat.

I looked up the official Chinese unemeployemnt labor stat. 4.3% (that is what they are telling the world) add the 5% that is infered by the ariticle 40-50 million undocumented workers in (article) and the Chinese unemployment rate is 10% roughly. Which is a mirrors of the U.S. rate!!

The U.S. Economy still drives the world economy.

Thanks for the correction on my math, but I would guess that the Chinese could have a unemployment rate of 20+% and it would not have much effect here in the U.S.

The unemployment rate is based on surveys--they actually ask a sample of people if they are working, looking for work, or not in the labor force. This is true not only in the US, but I believe most other countries also.

Of course high unemployment in China would eventually effect the average American, since the Chinese government would make drastic changes in its trade policies to deal with the umemployment.

Also, the figures would be probably look different if you looked at worldwide car sales instead of just US sales.

I can't remember if it was the BBC or CNN, but one of them mentioned that GM's sales in China are way up, and that in a year they will be selling more there than in the US. (That's just approximately, from memory and I'm not interested enough to do the research and quote sources etc.)

But it did surprise me. For financial muscle China and India are both in the big leagues, and still growing.

But it did surprise me. For financial muscle China and India are both in the big leagues, and still growing.

And neither one is a "Free Market" economy.

And neither one is a "Free Market" economy.

I'm hoping that the US will soon be a little less of a so-called free market economy.

The OP pointed out that the shrinkage in car usage was really a feature of teenage drivers.

The article goes on to say


In contrast, many of today’s young people living in a more urban society learn to live without cars. They socialize on the Internet and on smart phones, not in cars. Many do not even bother to get a driver’s license. This helps explain why, despite the largest U.S. teenage population ever, the number of teenagers with licenses, which peaked at 12 million in 1978, is now under 10 million. (See data.) If this trend continues, the number of potential young car-buyers will continue to decline.

Beyond their declining interest in cars, young people are facing a financial squeeze. Real incomes among a large segment of society are no longer increasing. College graduates already saddled with college loan debt may find it difficult to get the credit to buy a car. Young job market entrants are often more interested in getting health insurance than in buying a car.


We've been talking about this statistic as part of 2009's unemployment feature, but isn't there some other things happening? It seems like the automobile might be a little less of a necessity these days. Or perhaps some teenagers are seeing some car alternatives are cool?

Yep. I've been shorting.
I've felt for a long time that Communist + fiat money = disaster.
Just to comment, I lived in China from 06-09 and, even though I am back in The States, I have more daily contact with Chinese than with westerners. I say this to support my next statement, when In China I do not see much communism. I see more socialism in the US than in China.

Back on topic. I am responsible for one of those "fleet" removals. When I left for China I parked, and non-opped my jeep. Since I have returned I have had no reason to put it back on the road (it still gets used at my fathers farm, hauling fence materials, hay, and the like). If I need to go somewhere that I can not get to on my bicycle, or public transportation, I just my motorcycle. However, my wife still has her car (a RAV-4, it was the highest efficiency SUV we could find at the time). So, our "fleet" has shrunk somewhere between 0% and 50%, depending how you consider dedicated (off road only) farm trucks and motorcycles.

I would like to see the -2% rate continue. How long would it take to remove 20% of the cars from the road, 15 years?