By on March 31, 2010

An RL Polk study, reported in the Detroit Free Press, reveals that Americans scrapped 1.2m more vehicles than they bought in the 15 months ending in September 2009. 14.8m vehicles were scrapped in that time period, compared to 13.6 new registrations, suggesting that new car sales could be heading towards an upswing. And with an average fleet age of 10.2 years (the highest in 14 years), common sense seems to indicate that the rebound should happen soon. Polk VP Lonnie Miller explains:

It foreshadows what may be pentup demand. The assumption is that those vehicles have to be replaced.

But is it that simple? Even Miller admits that a number of factors might cause scrappage to exceed new registration for the immediate future.

One factor that must be taken into account is that Polk’s survey included the months in which Cash for Clunkers spurred both sales and scrapping. Says Miller:

Cash-for-clunkers did assure a one-for-one replacement, but we just can’t assume that when those programs end. We may see scrappage exceed new vehicles sales at least through this year

Why is that? Miller points to improved quality, longer warranties and longer financing terms. Needless to say general economic uncertainty, high unemployment and sky-high debt all provide a backdrop for Americans finally listening to Steve Lang’s advice and driving the wheels of their old beaters. And as Miller points out, downsizing baby boomers mean their kids have a wealth of used cars to choose from. In short, the RL Polk sees new sales cresting 11.5m units this year, there’s no reason to believe that scrappages won’t outstrip those numbers. And until we’ve junked a huge number of the beaters plying America’s streets, there’s little reason to expect a roaring comeback in new retail sales.

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39 Comments on “Americans Scrapping More Cars Than They’re Buying. But Is Demand Actually Building?...”


  • avatar
    toxicroach

    The hangover from a decade of easy credit volume expansion isn’t going to end in a year.

  • avatar
    Contrarian

    How much of this was due to C4C?

  • avatar
    Contrarian

    ^ Nevermind!

    As you mention C4C was techincally balanced out 1 for 1.

  • avatar
    educatordan

    I agree with better built cars and keeping them longer. The 1982 Chevy my parents gave me in 1992 was pretty much shot to heck, rust mechanical issues, you name it. The 1997 Escort that my ex-wife drove off in after the divorice in July of 2009 still looked pretty good and with the exception of a trans that went bad was in great shape. I’m getting into the used car market and there are some great deals, I couldn’t believe how cheap some of the CPO used cars were on Auto Trader.

  • avatar
    Steven02

    Probably fewer people owning weekend cars as well. When those go away, I doubt many are replacing them right now. I know several people are becoming 1 car families as a way to save money as well.

  • avatar
    Juniper

    That picture is enough to make a street rodder cry.
    I agree that longer lasting cars will reduce new car sales. Also the greater expense of new cars limits turnover.

    • 0 avatar
      ott

      +1. If Boyd Coddington was dead, he’d be turning in his grave.

    • 0 avatar
      educatordan

      Ummmmmm…… Ott, buddy, I don’t know how to tell you this, but Boyd Coddington is dead. 02/27/08 of complications from his diabeties.

      I love what he did (especially Cadzilla) but I always hated those guys who built a hotrod by just writing him a check, proably because I can’t afford to.

  • avatar
    twotone

    How many people have gone from two to one, or one to no cars?

    Twotone

    • 0 avatar
      George B

      I used to always have a beater car as a backup. The better newer cars are reliable enough to not require a backup car. Liability insurance became insanely expensive for a rarely driven old car, so I sold the beater. Would be happy to add to car demand if liability insurance spread across multiple cars instead of adding mostly independent of usage. Considering getting an antique 2nd vehicle to reduce some of the high fixed insurance and tax costs.

    • 0 avatar
      mikey

      My wife and I are thinking condo,with one ,two if were lucky,parking spots. We got three cars,and at least one has to go.

  • avatar
    Mr Carpenter

    It’s interesting that what used to be called Communist Eastern Europe now has an average car age of about 6 years while in the supposedly first-world country of America, our average car is now over 10 years old (and will continue to go south until the situation hits critical mass).

    Just as happened in late 1945, when no cars were built for 3 plus years, the tide will turn. But it won’t be as dramatic as ’45 was.

    It’ll be a slow creeping up of sales, but I daresay the USA won’t ever reach new car sales numbers of the late 20th or ‘zero’s ever again, until such time as the population is much larger (say in 20 years or more).

    In the meanwhile, let me predict this:

    Cars will become more decrepid and unsafe (and already we’re at the point where a good 50% wouldn’t pass British MOT tests and probably 75% wouldn’t pass the German TUV test).

    Old car insurance will increase (especially liability, as parts fall off and accidents happen, injuring and killing). It’s inevitable. See above.

    The law of unintended consequences will snap back and really truly damage Government Motors and Crapster. I’ll put this very plainly; Toyota has sufficient money, profit margin worldwide, patience and resolve to do what GM did to their competitors for decades – set real new car prices so low that it totally cripples the profitability of GM and Chrysler and severely injures Ford, though that would be inadvertent and unfortunate – life’s a bitch when you p*ss off the major competition and they hold many cards.

    It should be VERY interesting to see the March 2010 US auto sales figures, eh?

    • 0 avatar
      twotone

      That’s a bit misleading. I lived in Moscow 1992 – 1998 and saw a lot of old Soviet-era clunkers on the road when I first got there. During my five-year stay, cars on the street quickly migrated to nice new imports.

      It takes a lot of disposable income for eastern Europeans (and Chinese) to purchase a car. A lot of the upward economic mobility has occurred in the last decade. The old Russian clunkers were lucky if they lasted ten years. Twenty-year-old US cars are still pretty reliable and have a lot of life left in them. Plus, our roads are better, weather nicer and ability to service them more accessible.

      Twotone

  • avatar
    YYYYguy

    I suspect cash for clunkers had some additional effects. Think of all the folks across the nation that may have had one or two old junkers lining their yards. Perhaps C4C may have spurred an early “spring cleaning” and encouraged folks to scrap that old project car they now couldn’t afford to take on.

    Also, look at commodity prices. Whenever base metal prices jump, there is usually a spike in scrappage and recycling. I’d be interested to see the relationship between metal prices and scrappage by month.

  • avatar
    chaparral

    My Miata is now 17 years old and has 150,000 miles on it.

    I trust it with my life.

    It has “failed to proceed” exactly once in the three years I’ve owned it – when the worn-through alternator belt broke after six months of squealing.

    I don’t see anything wrong with driving a car of that age. The late-models my friends have break more often than it.

  • avatar

    My truck is 19 years old and I have no plans to replace it.

    Public transit usage is up, scrap the clunker and buy a bus pass?

    John

  • avatar
    mikey

    I was born in 1953 my wife in 56. Yup, we are part of the nasty boomers. We bought cars,houses,washers, dryers.TV’s clothes, you name it. Two big pay checks rolling in,why not?

    The only smart thing we did,was not taking on a whole lot of debt. With my wifes retirement on the horizon,we don’t buy anything we don’t have to,and that includes cars.

    My wife and I are just two, of the millions of boomers out there. Not only will the boomers stop giving to the system. We are going to start taking from the system.

    Look out gen X and Y

  • avatar
    ash78

    12 years and 8 years on our two daily drivers. By my calculations, if even if we consolidated into a single, slightly newer car, it would cost us about the same as driving TWO older cars (everything included: depreciation, tax, etc). Not to mention the immediate cash outlay, which would hurt.

    What’s going on now is the Millionaire Next Door syndrome, where it’s chic to be frugal. Hopefully (for the carmakers) this is just part of the increased savings rate, and car sales will pick back up just as soon as people are sitting on a real cushion of liquidity.

  • avatar
    obbop

    As the Boomers age expect a spike in various felonies, especially non-physical-harm types, as the working-poor Boomers (our numbers are legion) take what may be the only retirement route open to many of us…

    incarceration for 3 hots and a cot and at least some basic health care.

    No transportation worries or concern about affordable housing.

    Prior planning regarding what felony to commit will assist in ensuring that incarceration is within a minimum-security facility to hopefully avoid the worst of the violent scum prisoners being held in maximum security facilities.

    • 0 avatar
      toxicroach

      Yeah, you don’t get a lot of jail time for non-physical harm type felonies, especially when you are an old coot just trying for some penal welfare.

      Somehow I doubt you’ve really been to prison; it’s a lot like being poor, but worse. And if Medicare isn’t taking care of you, I can assure the prison hospital won’t be either.

  • avatar
    Syke

    Two of us at home, and I’m the only driver (doctor’s orders). Which means we’re down to two cars – one practical (’96 Chevy S-10, 150k) and one toy (’87 Porsche 924S, 120k). Also, two motorcycles (’98 H-D FXSTS, 48k and ’95 Triumph Trident, 102k) and a scooter (Qingqi). All are reliable and serve our needs. The scooter and motorcycles get the majority of the commuting work.

    I’m starting to itch to replace the S-10, preferably with something new, as I’ll be keeping it for 15/150,000. So I’m doing it my usual way: Save in advance until the bank account has enough to buy the car cash in hand, and still have $10k sitting in the bank.

    Probably next year . . . . . . .

    Payments? We don’t do no stinking payments. Or have any debt. Which is why I’m not particularly worried as I’m about to enter my fourth month of unemployment.

    • 0 avatar
      YYYYguy

      I once owned a Qingqi scooter. Boy was mine a piece of crud. Sold it and bought a Yamaha Zuma. Night and day.

    • 0 avatar
      ihatetrees

      Payments? We don’t do no stinking payments. Or have any debt. Which is why I’m not particularly worried as I’m about to enter my fourth month of unemployment.

      Syke, you are my hero for the day. I’m struggling to live up to the above standard.

      Best of luck finding employment.

    • 0 avatar
      Syke

      YYYguy,

      My ’06 Qingqi just turned over 3 years and 10k (kilometers), and has been a paragon of reliability. I bought it for the grins just to see what a scooter was like and as my main commuter, and the end result convinced me to pass on buying a new Honda scooter last summer – fortunately, since the Honda shop fell on hard times and a whole bunch of us got laid off last New Year’s Eve. The Qingqi is proof to me that the Chinese don’t necessarily make junk – but you’ve got to pick your marque (and sometimes manufacturing plant) carefully. I will not touch anything with the Lifan badge on it – and neither will the dealership after the first crates-worth was sold.

      ihatetrees,

      I’m that way I am because that’s how my folks raised me. My wife had the same kind of upbringing. Due to both the wife’s health and my addiction to being able to live on my own schedule, I’m seriously looking at telling the shop to go stick it and retire five years early. There is other income, and minus all the commuting and expenses from being in town each day (I’m not a complete miser), I’m finding getting by on what I’ve got remaining is working nicely. And having the time to bicycle 25-35 miles per day isn’t exactly hurting my physical condition.

    • 0 avatar
      YYYYguy

      Interesting. We need a TheTruthAboutScooters offshoot.

  • avatar
    NickR

    Juniper that was my first thought as well.

    Boyd Coddington was an epic asshole.

    “The 1997 Escort that my ex-wife drove off in after the divorice in July of 2009 still looked pretty good and with the exception of a trans that went bad was in great shape.”

    Even the brakes? That’s too bad.

    • 0 avatar
      educatordan

      You must have known him personally, I only know his work.

      Had the brakes done twice while I owned it, the only car I ever owned that the brakes would grind and vibrate at the TOP of pedal travel when bad, not at the BOTTOM of pedal travel. I’m really too nice of a guy I paid for the brake rebuild AFTER the proceedings started knowing that it would belong to her when it was all said and done.

      The kicker is that she hates that car but it’s paid for. That’s why she took it.

  • avatar
    gslippy

    I bucked the trend, going from 2 cars to 3 this past year. But the third, and one of the originals, has 145k miles. I hope to keep them a long time.

  • avatar
    gasser

    The number of cars in existence has many different reasons. The “pull” of necessity, which is blunted by the availability of public transportation. The “push” to buy a car is both the easily obtained financing and low rates (probably a thing of the past if home equity was involved.) Longer lasting vehicles is certainly part of it, but why do they last longer?? Build quality may be better but fewer miles driven is probably the main key. As cost per mile rise (mostly do to increasing Asian/Indian fuel consumption and thus rising gas prices) Americans tend to drive less. Whether its car pooling, trip consolidation or delaying buying your kid his first car, fewer new cars will be bought over the foreseeable future.

  • avatar
    Darrencardinal1

    I drive a 1990 Miata. What a blessing that car has been.

    Not only is it paid for, it is in excellent condition, all the accessories work, the air blows cold, and she does not leak a drop of oil. Not only that but she is a blast to drive. Even the paint still looks shiny and nice.

    Makes an amazing difference when you take care of your car, people.

    Car payments are for losers.

  • avatar
    Martin Schwoerer

    Demand will recover with the economy, but people will drive less per capita than in the past, so cars will last longer. Here’s why.

    The price of gas is going up. Two factors indicate it will continue to rise: The economy is improving world-wide. And millions of Chinese and Indians are buying cars, which increases the world-wide demand for gas.

    As much as we like to say we need to drive all the time, many miles driven are discretionary. As prices rise, people will drive less. And so, cars will last longer.

  • avatar

    Blame the Feds. Really.
    When the govt required cars to meet emissions for 100k, it meant that the cars had to be somewhat overbuilt. Also, with the electronics of today, that car will run with no real issues till something pops. I’d rather replace o2 sensors than fix the points and condenser (remember those ?) every 10k.
    My last car, a SAAB, had 125k when we sold it. I still see it “around”. The car before it, a Mystique, went 130k before I traded it in, on the current car which has 215k.

    People sell a car when it costs more to run than buying a new one, with a factor of (is it running ? Will it Start ? Will it get me home ?).

    The other reason to buy/sell, fashion, this years model, is currently out of order due to recession. Even if you are making out well, you are hesitant to buy “big” or “flashy”.

    The current fleet has lotsa miles to go.

    • 0 avatar
      rcdickey

      I don’t see the cars as overbuilt except by the planned obsolescence thinking of the past. The are now finally built as they should be (most anyway). When I buy a washer or a stove I don’t expect to have to replace it for 20 years or more unless I just want to.

  • avatar
    GarbageMotorsCo.

    I have a 2006 GMC pickup that needs another Intermediate steering shaft in 65 thousand miles and a squeeling rear axle.

    I’m ready to scrap it too.

  • avatar
    Mark MacInnis

    I drive a 13 year old Audi. My wife has a 10 year old Mitsu. Both running fine, thank you. No payments. Good mechanics who we trust. My wife doesn’t work, so if my car ever fails me, hers is the back up, and vise versa.

    I’ll probably buy a newer used car in two years for the daily (longish) commute. One thing that troubles me…if people with discernment only buy used, then the new car makers are marketing to those with no discernment. Will this trend, along with government domination of the auto industry, eventually lead to cars no discerning person will want?

    I keep my cars 7 years or so, as I will be retiring in about 15 years, I will be most likely making 3 to 5 more car purchases in my life (including 1 or perhaps 2 for my wife…). Living in a small, midwestern city with reasonable public transport(as long as our government doesn’t screw that particular pooch), I won’t be needing much in the way of transport after I retire….might even be in the market for an electric as my last purchase.

    My point is, like most boomers, we are nearing the phase of our lives where our vehicle needs will be minimized. So, I would expect that, as the generation which has defined American trends for the past 55 years, we will continue to define the automotive trend by our failure to buy in the near future, as much as we defined it by our buying habits in the past 30+ years….

  • avatar
    frankyJ

    I would say the vast majority of this is due to cash for clunkers. Things were absolutely crazy at that time. For nearly starters everybody who had a car that qualified for the program, traded their vehicle in. Now I was selling cars at this time, and not all these cars needed to be euthanized, but those were the rules. A lot of people were trading in 2 clunkers for one new car too. So I think this is why more cars are being scrapped right now than being built. Our Elizabethtown Ky used cars lot looks almost naked compared to what it use to look like. See for yourself at http://kiastoreetown.com


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