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Falling New Auto Sales in US Could Signal End of Era

  • Rosanne Skirble

The auto fleet in the United States is shrinking. For the first time since World War II, more used cars were scrapped than new cars sold in 2009. The fleet decreased from an all-time high in 2008 of 250 million vehicles to 246 million last year.

Driving is no longer a 'must' for some American teens

Traffic congestion, urbanization, environmental and health concerns push cities to boost mass transit and discourage parking

Traffic congestion, urbanization, environmental and health concerns push cities to boost mass transit and discourage parking

When Lester Brown was a teenager growing up in rural New Jersey in the early 1950s he says he couldn't wait to drive. "Getting a driver's license and then getting a car of some sort or a pick-up [truck] in the rural community was sort of a rite of passage," he says.

Today, Brown heads the Earth Policy Institute, an environmental research group based in Washington. In a new report, Brown contends that times have changed when it comes to Americans and their cars. Youth today aren't as interested in driving, Brown says, because more are growing up in cities and have learned to live without a car. "Increasingly young people are socializing over the Internet and 'smart' phones and not in automobiles," he explains.

Recession and pollution reduce new car appeal

Earth Policy Institute's Lester Brown suggests the shrinking car market is partly due to declining interest among young people

Earth Policy Institute's Lester Brown suggests the shrinking car market is partly due to declining interest among young people

During the current U.S. economic recession, consumers of all ages have been reluctant to buy big-ticket items such as new cars. But other factors like urbanization, congestion and environmental concerns, help explain why fewer cars are on the road.

Paul Eisenstein, senior editor for the online automotive news magazine TheDetroitBureau.com, is a long-time auto industry analyst. Like Brown, he sees a culture shift occurring among both car consumers and car makers.

"Consumers are rethinking what they are spending money on, whether they need to own as many vehicles in a household fleet," Eisenstein says. He adds, "The carmakers are also rethinking what they need to get consumers to buy so many vehicles." It wasn't unusual, Eisenstein says, for companies to spend between $5,000 and $10,000 per car to attract a single customer to make a purchase. Now he says, "Car companies are looking at finding a way to sell cars more cheaply."

In 10 years, 10 percent fewer cars may be on roads

Eisenstein says that could lead to fewer retail incentives, rebates and subsidies for new car buyers. It could also mean plant closings to bring car production in line with demand. Brown expects the U.S. auto fleet to shrink by 10 percent over the next decade. Many experts believe plant closings would result in a healthier U.S. auto industry.

Eisenstein says while he doesn't expect full recovery to previous production levels of 17 million vehicles a year, the market for American cars will improve because of immigration and population growth.

Looking ahead, Brown says the U.S. may follow the lead of Japan, a country with large cities oversaturated with motor vehicles. "Japan reached the saturation point in 1990 and its annual car sales have declined by 21 percent since then," he says.

But, Eisenstein says that, unlike the U.S., Japan has an easily accessible mass transit system that gives drivers an alternative not available to most Americans. "[That's] complicated by the fact that our cities are much further apart than they are in much of the world." He says there is really nothing else to turn to.

The car once promised mobility

In 2009 more cars were scrapped than sold – the U.S. auto fleet shrank by 4 million

In 2009 more cars were scrapped than sold – the U.S. auto fleet shrank by 4 million

Today drivers must contend with traffic jams, congestion and pollution. And it's becoming a global problem. Brown notes that China has begun to outpace the U.S. in new car sales. He says if China were to reach the same level of per capita car ownership as the United States, the resulting traffic congestion, pollution and land use shifts could have a devastating impact on Chinese society. "[Just] think of the roads, the streets, the parking lots, [and] the land that has to be paved over to support that level of car ownership," he says. That would be equal, Brown adds, "to two-thirds of the area of rice planted in China today."

In this context, Brown believes a shrinking U.S. car fleet could help address the problem of climate change, lessening dependence on foreign oil and reducing carbon emissions from the transportation.

Brown predicts that a smaller U.S. car market will shift steadily away from fossil fuel powered vehicles to more hybrid and electric models. One case in point is that the Toyota Prius hybrid was among the top ten best-selling cars in the United States in 2009. Brown says auto companies that fail to note these trends and embrace these new technologies will be left in the backwater of a bygone automotive age.

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