Chart of the day: Car ownership

By Felix Salmon
June 1, 2009

Light_vehicle_sales.PNG

Many thanks to PeakVT, in the comments, who links to this particularly ugly chart which does do what I wanted and show how the number of cars per 1,000 population has evolved over time. The lines are sales figures; the darker line shows that we’ve dropped from selling almost 60 cars per 1,000 population per year to selling about 35 of late. The black squares show that we now have about 780 vehicles per 1,000 population, up from about 750 ten years ago.

In other words, for most of the past decade, every group of 1,000 people bought about 60 cars a year and ended up with about 3 more vehicles at the end of the year than they had at the beginning. So what happens when they’re only buying 35 cars a year? Even if they manage to hold on to their old clunkers for a bit longer than they otherwise might have done, the total number of cars per 1,000 people is likely to fall quite dramatically: a year or two of this and we could be back where we were ten years ago.

Still, check out this league table: the US has vastly more cars per 1,000 people than any other major nation. Canada, for instance, has only 563 vehicles per 1,000 people — less than three-quarters of the US figure. For America to even approach that level would be unprecedented in living memory, but there’s really no particular reason why the average American needs 36% more cars than the average Canadian. If you’re losing say 15 cars per 1,000 people per year, it would take over 14 years to get down to Canadian levels of car ownership.

Hugo Lindgren, in this week’s New York magazine, quotes the NBER’s Robert Gordon saying that auto-sales rates are bound to pick up:

It’s hard to imagine any good news out of Detroit at this point, but Gordon says it’s coming. Before the recession, annual U.S. automobile sales were about 18 million vehicles. They’ve dropped to half that, an insanely low—and unsustainable—level. At this rate, the average car would have to last 25 years. A typical replacement rate would boost auto sales up to around 15 million a year, and Gordon expects that we’ll start working our way back to that figure this year, buoying the stronger auto companies and putting workers back on the line.

If we’ve learned anything over the past decade, it’s that things can stay at unsustainable levels for much longer than anybody might imagine. And over the medium term, it’s far from obvious that auto sales in the 9-10 million range are really as unsustainable as all that. Not only don’t we need to get back to “a typical replacement rate”; it’s actually very unlikely we will ever again see the rates of car ownership that prevailed before the crash. That was a world of 3-car garages in exurban McMansions; we’re moving into a more sustainable way of living, which involves fewer cars and higher urban density. Those black squares in the graph above are going to start marching downwards for many years to come. Which means that the wiggly lines aren’t ever going to regain their prior peaks.

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24 comments so far

That really is bad, isn’t it? I blame OpenOffice for some of the problem (the white text results from a cut and paste bug). A more up-to-date chart with a shorter time scale is here. The sales reporting runs a month behind, so it is current through April.

Posted by PeakVT | Report as abusive

Dear Sir ,
I read all over several opinions regarding the futere of the new G.M.
Two questions .
Who will loose al the money of the previous debts,for to avoid such ,bankcraptcy is delared ?
What the impact will be from eventual deminise of previous stocks to the simple American people who had them as life savings?
Last , if bankcraptcy declared ,understand there are Derrivates? CDS how you call it,which will be mobilized.
Who is loosing/winning these billions ?
Thanking you
Dimitris

Posted by Dimitri Vassilopoulos | Report as abusive

I see that the chart is labeled “Light Vehicle Sales”. Does that mean that these numbers exclude some or all SUVs?

Posted by Jim Tobias | Report as abusive

That was a world of 3-car garages in exurban McMansions; we’re moving into a more sustainable way of living, which involves fewer cars and higher urban density.

That sure is a trendy point of view, but I’d be interested in betting against it.

If you look into the data a bit more, you will find that the US has about 1.1 vehicles per licensed driver. A significant portion of that is fleet vehicles (rentals, police cars, taxis, delivery vans), which means we are just a bit below 1 personal vehicle per licensed driver. There’s no reason to believe this is fundamentally unsustainable — there are very few places in the country one can live without a car, and this will be true for a very long while.

The key question for auto sales is how many more years can drivers squeeze out of cars currently on the road. This is what will determine how long new vehicle sales will stay depressed.

Posted by right | Report as abusive

The Canadian car ownership percentage is lower because the majority of the Canadian population lives in urban areas. If Americans started moving towards urban, & semi-urban areas with more mass transit, or if mass transit was expanded and improved, one could see further declines in the number of vehicles per capita in the US.

Posted by Greg | Report as abusive

I see that the chart is labeled “Light Vehicle Sales”. Does that mean that these numbers exclude some or all SUVs?

The term “Light Vehicle Sales” generally includes cars and “light trucks”, i.e. SUVs, pickup trucks, vans, etc.

Posted by right | Report as abusive

Right, I don’t think there’s anything magical about 1 car per licensed driver. For one thing, half the US population lives in cities, and a family living in a city is very unlikely to have 1 car per licensed driver.

Posted by Felix Salmon | Report as abusive

I can not talk about statistics but I can relate my own car experience. I was an exotic car owner in 2003/04 when I created the ‘gurfrip.com/utube-’you be the star’ Business Model and submitted it to Google to be an ad partner in 2004 while economically crippled under a domestic security action in Newburgh, NY.

Since that time I have liquidated all assets including my 1974 Pantera, a BMW and a Kawasaki, allowing me to keep my Lotus and my 2000 FORD FOCUS Wagon, which has at times functioned as a HOTEL ROOM and STORAGE UNIT.

Recently, the Ford needed an expensive Timing Belt, so after working in a friends garage for a day, I decided my monthly costs of ownership now dictated a new car.

At my Price Point dictated by my Paupers Budget of ONLY NECESSITIES the only new car available is a SMART CAR. Though as I have provided plans for a new mini-supercar called the SPORTeV to FORD Newideas, they did not come up with a timely or appropriate proposal for me to Drive a Ford.

As I go foreward, hopefully with a LEGAL SETTLEMENT from GOOGLE INC, that allows me to restore my garage (once I am able to replace my housing, as the back of my ford is not appropriate housing). I will proceed to again buy cars and we might even direct our new company which bails out the news industry to also buy cars for employees (LIKE EUROPE DOES) but as I have researched BASIC TRANSPORTATION the recession requires of me, I see none available from Domestic Companies that offers both Quality and Price.

Sure, they have Newideas about Quality and Price but nothing significant on their showroom floors and the Domestic Dealers are not being aggressive with their inventory as they ‘await’ word from the Government.

US Dealers are not offering the insentives or inventory type that SATICEFIES MY BASIC TRANSPORTATION NEEDS CONSUMER in a RECESSION.

Certainly the SMART dealer has been much better responsive than all the US counterparts, who seem to be waiting from ‘word on high’ to decide to ‘move their inventory at a discount’.

Sure, I would rather have a Mustang with four seats for my ex wife and my daughter on their occasion to visit but I just can’t afford one right now.

The Government (“Google-heads”) who think I can live on a $1,700 per year Summer Job having maitained an Excellent Credit Score through a Corporate Attack on my property that the SEC continually defers to allow the markets ‘time to absorb’ prior to CAUSING FOR PAYMENT and be able to TRANSPORT MYSELF need to come back to the REAL ECONOMY where us REAL HUMANS need to LIVE.

Domestic auto producers have spent too long in the imaginary bail-out cyber space and are not meeting modern consumer demand.

They are waiting for hand outs to create products the public doesn’t need. While people like me who DRIVE THE NEW ECONOMY by meeting the NEEDS of the PUBLIC with Systems can not get MONEY because it is being WASTED ON THE DINOSAURS.

Our new (“Google-Head Economics”) can’t sell a car.

Felix, I didn’t say there was anything magical about it. I’m just saying there’s no reason to believe it is unsustainably high.

I’ve lived in my fair share of US cities, and the only places one can reasonably live without a car are most of the five boroughs of NYC, and certain parts of Boston, Chicago, DC, San Fran, and Philadelphia. That’s FAR less than half the US population (also consider there are plenty of people who have always lived in those cities, esp NYC, who wouldn’t be licensed drivers and wouldn’t affect the metric). Otherwise — Miami, Dallas, Phoenix, LA, Detroit — those are big cities yet you need a car.

Posted by right | Report as abusive

PS. I’ll by a US AUTOMBILE when they provide me what I NEED>

I do not know much about cars, but years ago I heard something about cars produced after early nineties being less prone to corrosion. If this means that the average car is usable for three or four years more than earlier vintages, there should be a decline starting somewhere around now in the number of cars needed each year to keep the number of cars per thousand people constant.

Posted by Gaute | Report as abusive

Thanks for the neat post.

And the comment by Mr. Harris is a treasure.

Posted by jonathan | Report as abusive

I could see an argument that anything below about 1 car per household is unsustainable in the US. But there are many places in this country where a family with 2 or 3 licensed drivers can easily get by with 1-2 cars instead of 2-3 cars. I suspect the trend is not going to be any dramatic increase in the number of car-less households, but rather a significant reduction in the number of cars per household. This could easily drive the average number of cars per driver well below 1.

Posted by Tim | Report as abusive

It’s the “easily” in Tim’s comment that is problematic. No question the second (or third) car is often a poor pure-economic decision, but the lack of those CarShare type things now common in NYC and Philadelphia makes 1:1 almost inevitable.

Otherwise, you get into the “well, if you get up at 6:30 and drop me at the train station–and commit to picking me up at 8:30–you can have the Station Car all day.” At best.

In examining your referred source tables and charts, I see that you slip between “car” and “vehicles” which will yield significantly different numbers. You should compare apples to apples. Notably, while the US has more vehicles per 1000 population, Italy has the most “cars” per 1000, it is the Netherlands that has the highest density of vehicles. I’m guessing that this is a function of how they define vehicle vs. car. If it includes the commercial vehicle transportation sector, motorcycles, etc, the story is significantly altered.

JMC

Posted by John | Report as abusive

There are three main ways cars stop being registered vehicles:

1. They’re scrapped once they’re unsalable.
2. They’re stolen and chopped for parts.
3. They’re legitimately exported as used cars (mostly, it’s my understanding, to Latin America).

The rate of scrappage is not likely to change over the next decade or so. We might even see an increase in the rate of stolen cars if parts become harder to get and therefore more expensive. But the rate of export is likely to fluctuate as demand for used cars in the US fluctuates.

So we can’t rely on the number of registered vehicles dropping pari passu with the drop in sales of new vehicles.

Right & Ken Houghton:

I lived in LA land for a year without a car. Also Seattle, Austin, Portland OR, and many small towns you’ve never heard of in Texas, Kansas, Wyoming and elsewhere.

IME the only place one “needs” a car are outer-ring suburbs and rural areas. And in those places — dig this, man — you can SHARE. It is mucho cheaper too. It practically cuts your car expenses in like HALF. You don’t need car-sharing, you just a friend with a car, or a friend who needs a car. The more friends you have, the cheaper it gets.

My point isn’t: “let’s all ditch our cars, they’re useless!”

My point is: one’s life story and hand-waving suppositions about “the way people live” make for lousy economic data.

A perfect 1:1 correlation of driver:automobile is not a law of physics and I wouldn’t bet for it or against. (Maybe those $2000 Indian cars will show up here and then we’ll all buy six to coordinate with different outfits.)

Here’s what I’d bet on: it’s ALWAYS cheaper to own fewer cars.

Posted by pablito | Report as abusive

Tim (And Felix)- True, but part of the equation is number of households. And that’s a function of population and people per household. Population is likely to slowly increase over the medium term, at least. It will be interesting to see what happens to people per household, which had been trending down.

I’d bet heavily the current sales pace is unsustainably low beyond 2010. In a way it’s like the bet against US Treasuries, if the US Gov’t can’t make good it’s an indication of severe stress such that no else is likely to be able to either. Similarly, given the lack of effective options for most US households in the short term, a sustained sales pace below 10 or 11 million would be a sign of severe economic stress on households that would bode very poorly for everyone.

Posted by OGT | Report as abusive

Great post, Felix. I love your comment about the length of unsustainable states – especially since our market is saturated with vehicles whose useful life is now double the useful vehicle life of 20 years ago. I would contribute only three things: 1. OGT’s insight about household size is important. Here in Seattle it may be below 2.0 persons per household. 2. Even in Seattle, a very easy town to manage transit, a car is a huge benefit (think about outdoors lifestyle) and very, very, very few people with incomes above $20k will forgo a car. 3. But with the saturation and long useful life, what’s more likely is an upturn in late 2010, but a 5-7 year sales level oscillating between 12M and 15M. That might actually line up with Imports + Ford = level sales and GM/Chrysler at 50% of 2006 sales.

But another question: what does this mean for our petroleum consumption, if we have a very slow replacement rate for our existing stock? It means we can’t count on a 15% increase in national LV fleet mileage until 2016 or even 2020. The oil shock of 2012 could be very painful and very long lasting…..

Posted by Dollared | Report as abusive

To what extent is your hypothesis infected with recency bias? How much can we be sure that the behaviors expressed in the crisis environment of October through February/March will be long-term behavior?

Gas prices had spiked before and people still embraced the SUV…

If we’ve learned anything over the last 30 years, from the Carter disaster, through the Obama disaster, its that liberals do not understand the meaning of the word “sustainable”. They have told us we are running out of this, running out of that.. their predictions have never come close.

“Unsustainable” really means little more in liberal or “progressive” parlance than a knee-jerk, reactionary objection to real progress. Environmental fundamentalism borne of living in highly dense urban areas with no cars and therefore no real interaction with the actual environment.

They told us we were running out of food, we grew more. (now they demand we put it in our gas tanks.) They told us we were running out of oil, we keep finding more. We’ve found enough at this point to fuel the next 500 years. (Now they write laws prohibiting the exploration and recovery of new oil reserves we know exist…I guess to fulfill their own failed prophecy.)

The only thing liberals know about “unsustainable” is how to make unsustainable policies.

Posted by Reality Check | Report as abusive

Vehicles per capata does not tell us much about their kind or usage. We could evolve towards specilized, perhaps smaller, special purpose vehicles. We might have “golf carts” for short-range shopping and larger, “status vehicles” for special events and excursions. There may be MORE vehicles per capata in our future, but that might be MORE sustainable.

Posted by reACTIONary | Report as abusive

Looking at your chart, things are no lower than the bottom of the 70′s, and things are looking to get worse. So, why is what looks to be an ebb and flow of the health of the economy suddenly a rally cry of people giving up their cars?

Hogwash. It’s going to get lower, and then, in a few years, will be back up.

Posted by EZ | Report as abusive

For people who are concerned about the environment, the sales chart brings a bit of optimism. Less cars bought means there might be a shift in demand to public transport or bicycles. However, there are still more cars on the roads than ever. I wonder if there is enough garage space for those families with more than 1 cars. Perhaps in time, we will also see the total number of cars on the roads decrease, as public transportation systems improve.

Peter – http://www.pmwltd.co.uk

Posted by Peter_Mould | Report as abusive
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