By on April 29, 2009

The question of a sales recovery looms large in discussions of GM and Chrysler’s road to viability. In particular, GM has been accused of overestimating demand recovery, as its successive viability plans have consistently revised demand assumptions downwards. But a survey and followup by RL Polk (full report in PDF) suggests that not only are a significant number of American consumers considering vehicle purchases, but many would buy American to “support the economy.” In all of the surveyed regions at least 50 percent of vehicle owners aged 18-64 said they planned a vehicle purchase in the next two years. Good news for Detroit? Polk’s breathless press release for updated regional data sure makes it sound like it. “In fact, more than a quarter of consumers we talked to as of the end of March plan to buy a new car or truck within the next year, even better news for automakers struggling to move excess inventory from dealer showrooms,” says Polk’s Lonnie Miller. But a closer look at the original survey shows that it’s too early to start counting chickens.

The study shows that 60 percent of consumers oppose the auto bailouts, despite acknowledging that bankruptcies would be “a major blow” to the US economy. But the data also shows Americans taking a pragmatic approach to the alleged crisis. Though predictions about the state of the economy over the next twelve months were all over the place, over half of respondents predict that their family’s financial status would stay the same. Less than 30 percent predicted their situation worsening. Still, 32 percent predicted a vehicle purchase in the next year, while 26 percent were considering a purchase in the next two years. 72 percent would “consider” a domestic vehicle in order to “support the American economy.” Tragically no control was done to show, for example, how many respondents would be willing to take a sharp stick in the eye “to support the American economy.”

Besides, the key metrics in the survey show that the average length of vehicle ownership is increasing, and that as many Americans are considering used vehicles as domestics. Average ownership length for new cars is now 56.3 months, up about six months since 2002 and on a long-term trend upwards. Two thirds of respondents tell Polk that they are “very likely” or “extremely likely” to keep vehicles “longer than they would otherwise,” with another 25 percent responding “somewhat likely.” Worse still for Detroit is the 70 percent reporting being at least “somewhat likely” to consider a used vehicle.

Polk’s picture is clear: the economy is bad so people are holding onto their vehicles longer and considering used cars. The common sense of these conclusions stand in sharp contrast to the “would you buy a Detroit-made car to feed your family” question. Re-parsed through a regional lense the data comes out looking better from Detroit, but the underlying trends clearly point to a persistently weak market for new cars.

Get the latest TTAC e-Newsletter!

20 Comments on “Sales Recovery Survey: False Dawn?...”


  • avatar
    Casual Observer

    What people think they’ll do in the future with theoretical money often differs from what they will actually do with real money.

    I remember a story on this site about a poll of Americans in which so-many% of people stated fuel economy to be the most important issue when buying a vehicle. This story appeared as SUV sales picked up steam and hybrid sales plummeted.

  • avatar
    alexcassidy

    “suggests that not only are a significant number of American consumers considering vehicle purchases, but many would buy American to “support the economy.””

    I might buy a car within the next year, and I might even buy American, but it sure as hell won’t be from GM or Chrysler.

  • avatar
    sean362880

    72 percent would “consider” a domestic vehicle in order to “support the American economy.”

    Isn’t this a Bradley effect type of question?

    Plus, how much will something as slippery as “support the American economy” affect our personal auto purchasing decisions? It hasn’t for the preceding 30 years.

  • avatar
    JMII

    Agree with your analysis Ed. I’m the pretty much the poster child of these trends since our next “new” car will be a used Infiniti and it will be purchased sometime this summer. In addition we are keeping our current 10 year-old Passat and 8 year-old Dakota.

  • avatar
    Ken_DFA

    As an aside, I was at a meeting last week where David Cole from CAR spoke about the current sales climate. In his esteemed opinion, a sales level of even 14-16 million vehicles per annum represents “a recession-level” and that vehicle sales should be up around 18 million by 2011. Yeah. I generally have a tough time believing unsupported projections from people with orange tans that make Ric Flair look like the kid from Powder.

  • avatar
    jurisb

    Of course it is a false dawn. Whom do you expect to buy your cars? If US economy has shed 2.6 million job positions last year, and continue dramatically slashing this year, whom do you really expect to do th the shopping frenzy?All the highly skilled and paid jobs are leaving US, so there soon will be noone left to buy a car, except Wallmart salesclerks who will most likely buy 3 year old Accents and Rios.Actually US economy won`t recover in next 10 years and will go into depression because the backbone of the country- Highly-skilled manufacturing with high added value has been dramatically crippled.

  • avatar
    brettc

    The only Chrysler product I might ever consider is a Sprinter, but that’s because it’s just a re-badged Mercedes. However, Sprinters are pricey so it’s not likely that I’ll ever buy a Chrysler.

    Before the bailout, I’d never buy a GM product based on family experiences with GM products in the past. Now I won’t buy a GM product because of the first reason, along with the fact that they couldn’t save themselves long before it was too late and are now on corporate welfare.

    I might consider a Ford at some point, as long as they don’t dine at the bailout-trough.

  • avatar
    findude

    They always poll other people.

    We own three cars we bought new–average ownership time is over 94 months. We do in fact plan to buy another car in about two years–I’ll stretch it a bit longer to buy a new 2012, but if it’s shorter we’ll probably either go downmarket or buy used. We really ought to dump our oldest car and just buy a new one now, but I resist. It’s not the economy, it’s that I really believe the auto industry is in transition and that the offering of vehicles available to me will be very different in another two or three model years. Companies may go out of business, the cost of fuel may change dramatically, and my needs may change.

    Add uncertainty about the nature and amount of supply in the new car marketplace to the mix.

  • avatar
    lw

    Funny… Read this from R.L. Polk and tell me why ANYTHING they produce should be trusted.

    Hold on, the National Association of Realtors is returning my call. I’m asking them if I should buy an extra house this year as an investment… Wonder what they will say…

    R. L. POLK & CO. is the premier
    provider of automotive
    information and marketing
    solutions. Polk collects
    and interprets global data,
    and provides extensive
    automotive business expertise
    to help customers understand
    their market position, identify
    trends, build brand loyalty,
    conquest new business and
    gain a competitive advantage.
    Polk helps automotive
    manufacturers and dealers,
    automotive aftermarket
    companies, fi nance and
    insurance companies,
    advertising agencies, media
    companies, consulting
    organizations, government
    agencies and market research
    fi rms make good business
    decisions. A privately held
    global fi rm, Polk is based in
    Southfi eld, MI with operations
    in Australia, Canada, China,
    France, Germany, Japan,
    Spain, the United Kingdom
    and the United States. For
    more information, please visit
    http://www.polk.com.

  • avatar
    Pch101

    In four previous recessions since WWII, car sales fell 20-26%, peak to trough. The recovery period from the trough was generally just a few quarters.

    Unless this proves to be very different, the car market should fully recover by 2010 or 2011, and that recovery should be starting this year. I’ll bet that the first half will suck, but the second half will show improvement, and 2010 will be better than that. The world isn’t over just yet.

  • avatar
    toxicroach

    Gm has been destroying wealth over the past 5 years. Sorry. It’s true.

    I don’t think levels will get back to pre-recession levels because there was a car bubble as well has a housing bubble. So I think it was elevated above its “natural level”.

  • avatar
    ptr2void

    @lw: So, in non-marketing speak, R.L. Polk can spin your statistical data so even when things are in the toilet, the smell is that of freshly-baked cinnamon buns.

  • avatar
    lw

    @ptr2void

    Any entity that makes a good portion of their income based on a functional / healthy GM and Chrysler cannot be trusted to be objective at this point. They have too much to lose.

    They are all very smart people and will do whatever it takes to preserve their cash flow.

    We probably got the most objective information when GM and Chrysler were making more money than they knew what to do with. Now when we need the hard core objective data/viewpoints, it’s all spin because times are tough.

  • avatar
    Pch101

    I don’t think levels will get back to pre-recession levels because there was a car bubble as well has a housing bubble. So I think it was elevated above its “natural level”.

    New car sales peaked in 2000, at about 17.3 million units. Even 2007 sales were back to 1998-99 levels.

    2008 slid back even further, to about 1993. That’s a sharp pullback that suggests that the current sales level is really too low. It may not go back to 2000 levels, but it’s going to move up from here. When the fear subsides and leasing programs make a come back, higher sales are almost a certainty.

  • avatar
    davey49

    I’m typically a keep my car for 10 years type but even I’m considering a new car in 2 years. I’d like a nicer car than my Saturn. I have no issue with a D3 car. Don’t care about “bailouts” . Leaning towards Buick or Ford.

  • avatar
    davey49

    Buying any car would support the economy.
    Buying anything supports the economy.

  • avatar
    amadorgmowner

    I no longer have any new car dealer in my rural county in California thanks to GMAC killing my local GM/Toyota/Chrysler dealer in December and Ford Motor Credit killing off our local minority-owned Ford-Mercury dealer in mid-March. So, no I won’t be buying a new car soon because I have no more local dealers. And after 25 years of buying GM vehicles, when I do purchase it sure as hell won’t be anything from GM. They don’t give a shit about their customers. Toyota, here I come.

  • avatar
    ronin

    Not buying anything also supports the economy. Savings are a key ingredient to investments, either directly by debt or by capital investments. This funds growth by companies so that they can expand and make things.

  • avatar
    Kristjan Ambroz

    After taking a brief look at the Polk study, the only conclusion is that it’s garbage. They conveniently forget to state any relevant sample characteristics, which would allow you to judge its quality, and from my experience of dealing with market research, 713 is not nearly enough for any sort of reliable conclusions. Add to that the fact that questions are generally interpreted as answered by most market research agencies, without checks for consistency.

    It’s not necessarily malicious but the problem is that the majority of the people doing these interpretations really do not have the necessary statistical grounding, intellectual curiosity and honesty, or in most cases money (for a properly designed, sufficient sample size study) to produce anything meaningful.

    In all market research I’ve seen or been involved in, intention is a very weak predictor and usually reflects a post purchase rationalisation bias. People are generally consistent, so as a theoretical example, someone who states they have a preference for Ford will most likely have a high intention of their next purchased vehicle being a Ford. Wheone looks at actual purchase behaviour for that individual, brand loyalty rates tend to be no higher than for people, who express no preference for a brand and a much lower intention of purchasing the same brand.

  • avatar
    Kevin

    72 percent would “consider” a domestic vehicle in order to “support the American economy.”

    That’s a bogus leading question in any case. NO ONE is going to lay out $20 – $40 thousand to “support the economy” despite anything they say while being polled (which if I recall from junior high school, is a form of torture).

    A more valid question is “Will buy an American car?” period. But the only thing that matters is revealed preference … checkbooks don’t lie.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributing Writers

  • Jack Baruth, United States
  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Vojta Dobes, Czech Republic
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Cameron Aubernon, United States
  • J Emerson, United States