Good News! About Car Sales! On TTAC!
All recessions recede. Eventually. In the case of this recession, it may be the car driving us out of the economic bog. Pent up demand could soon stoke the car market and relieve the general dearth of demand putting downward pressure on the economy. You can see it in our turnover ratio: the total number of registered vehicles in the U.S. divided by the sales rate. As of this quarter it’s 23.9 percent. That’s the highest ever, because it’s ridiculous. Americans are not planning to replace their vehicles once a generation. It can’t be done. My father tried it and the salt-covered roads of upstate New York put holes in that plan. Rust always wins.
The demand for cars is building like the magma under Kilauea. To paraphrase John Maynard Keynes, capital needs to be replaced periodically due to use, decay and obsolescence. Or, in automotive terms, wear, tear and something way better has just hit the show rooms. Exactly how long this miraculous bounce back is going to take? I don’t know. The 1981 recession took six years to escape. Still, you know, that’s kind of good news, right?
More by Michael Martineck
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"Especially if it’s a piece of crap Neon or Chevy Cavalier." Don't compare those two cars together. It's insulting to the Neon. I see plenty of old Neons on the road despite the fact that they sold over twice as many Cavaliers.
What about population growth? It's 1% per year. All those people need cars.