Whither new car sales?

By Felix Salmon
May 31, 2009

The NYT has an interesting chart showing light-vehicle sales, on a seasonally-adjusted annual basis, every month since 1976. The chart would seem to imply that a large uptick in vehicle sales is in the offing. But there’s one other chart I would like to see total cars per household (or per person) in the US. Was there a significant increase in cars per household as America suburbanized and moved into bigger homes with bigger garages? And if we’ve reached a far-too-high number of cars per household, how long will new-car sales have to remain near current levels before we get back down to a “new normal”?

I think that when auto financing becomes broadly available once again, the number of new-car sales is bound to rise. But those new cars might well be smaller and less profitable than the SUVs of the past decade. I suspect that much of the boom in SUV sales was a function of everybody else buying SUVs: it’s much more pleasant to drive a small car in Europe, surrounded by other small cars, than it is to drive a small car in the US, surrounded by SUVs which you can’t see around and which tower menacingly over you.

What happens to car sales when the getting-bigger trend comes to an end — as it must — and starts to reverse course? For one thing, the desire to upgrade to a bigger car starts to dissipate. And if you’re not going to upgrade to a bigger car, why buy a new car at all?

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