Holding On: Americans are Keeping Their Older Cars

It has been standard wisdom that the American auto market was good for 16 million car and truck sales annually—until it wasn’t. Last year, three million sales just vanished—total sales were just over 13 million. Taken as a whole, 2009 is likely to be considerably worse than 2008. CSM Worldwide forecasts 2009 auto sales at 9.7 million, down (because of pessimistic employment numbers) from the 10.7 million it recently projected.

Americans have not purchased fewer than 10 million vehicles in any calendar year since 1970, says Autodata Corporation.

It stands to reason, then that consumers are keeping their cars longer than ever before, and that is indeed the case. According to a study by R.L. Polk & Company, the median age of cars in circulation reached 9.4 years in 2008 (it was 9.2 in 2007). Further, only 5.1 percent of cars on the road were taken off in 2008, compared to 5.5 percent in 2007.

Go further back, and the contrast with today is even more striking. The Bureau of Transportation Statistics reports that in 1990 the median age of automobiles was 6.5 years.

The New York Times noted the phenomenon recently. According to the paper, “So many drivers are holding on to their cars and trucks that franchise dealers in 2008 for the first time secured more of their vehicles through auctions than any other means.”
 
When people somehow, inexplicably, fail to buy new cars it has ripples through the economy, from service (since older cars are often neglected) and parts suppliers to the dealers who are now sitting on their hands waiting for customers.

New cars are not only good for the economy, they’re good for the environment, since it’s a small percentage of older “clunkers” that produce the majority of tailpipe pollution. And that’s why a new bill sponsored by Representative Betty Sutton (D-OH) would offer rebates of up to $5,000 to people turning in their gross polluters and buying more fuel-efficient vehicles. If the car you’re buying is made in the U.S.A, you get $1,000 more. “There is a sense of urgency with car sales slumping,” Rep. Sutton said.

Expect classic car advocates to be up in arms over this. Their opposition—based on the idea that those “clunkers” are also excellent parts cars—has scuttled or at least seriously impeded legislation of this type.