According to the LA Times in an article titled, Buying Habits are the Latest Automotive Import. For the first time since 1963 consumer spending on cars is down and it is due to the weakened economy and the spike in gas prices. Two things have changed, according to the article, the amount of cars that we buy and also the kinds of cars we buy. This is because the baby boomers no longer have the money they thought they were going to have to retire on and so they are spending less on cars and aren't buying cars to take a lot of gas. They are also not able to tap into the equity of their homes to use that cash to buy new cars because their homes have gone down in value. Car companies are struggling to get people to take cars off their lots and it seems that people are looking for cars that are reliable and are fuel efficient. In certain ways we have been becoming more like our European counterparts in the way that we shop for our cars and it is a new dynamic that was never thought to appear in the spending habits of U.S consumers. The article states that in the past people were buying about 6 cars per every 100 people in the country per year. This year it is closer to 3 people per every 100. This is killing car sales in the U.S and the people who may had bought a new car this year has shrunk just because they are afraid to spend the money.
I feel that this is something that we are going to see forever in the buying habits of people, especially when buying something as expensive as a car. The repercussions of this recession will be felt for a long time after it is done and my gut feeling is that the people of my generation will always carry a bit more of a cautious attitude about their spending. That said, I also think that when the article says that car sales will be back by 2014 is conservative but I guess the writer feels that time frame is enough time for the economy to rebound. Only time will tell if things have changed in the minds of American consumers, if the past is any indication, things will go back to the way they were just as the 1920's saw great innovations in auto design, followed by the 30's and the generic cars of that time and then 40's and 50's with some of the greatest cars designs of the 20th century. If money and fuel are plenty the auto market will reflect those trends.
Consumers and the auto manufacturers used to look at cars as disposable. Given the recent credit crisis, they are looking at the prospects of keeping cars for longer than the traditional 5-7 years, which will require drastic changes in the worldwide auto industry.
ReplyDeleteKevin Trosian
http://tower12.blogspot.com/
www.tower12.com