Americans Scrapping More Cars Than They're Buying. But Is Demand Actually Building?

Edward Niedermeyer
by Edward Niedermeyer

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.

Edward Niedermeyer
Edward Niedermeyer

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  • Mark MacInnis Mark MacInnis on Apr 01, 2010

    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....

  • FrankyJ FrankyJ on Apr 01, 2010

    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

  • Analoggrotto I am sick and tired of every little Hyundai Kia Genesis flaw being blown out of proportion. Why doesn't TTAC talk about the Tundra iForce Max problems, Toyota V35A engine problems or the Lexus 500H Hybrid problems? Here's why: education. Most of America is illiterate, as are the people who bash Hyundai Kia Genesis. Surveys conducted by credible sources have observed a high concentration of Hyundai Kia Genesis models at elite ivy league universities, you know those places where students earn degrees which earn more than $100K per year? Get with the program TTAC.
  • Analoggrotto NoooooooO!
  • Ted “the model is going to be almost 4 inches longer and 2 inches wider than its predecessor”Size matters. In this case there is 6” too much.
  • JMII Despite our past experience with Volvo my wife wants an EX30 badly. Small, upscale, minimalist EV hatch is basically her perfect vehicle.
  • Dukeisduke Is the Volvo EX30 even on sale yet? It was pulled from the NACTOY awards because they were having software problems with the vehicle.
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