With gas prices predicted to stay low, U.S consumers are leaning towards their love for trucks and SUVs for new purchases. April 2016 saw just over 1.5 million autos purchased, beating out the old record set 11 years prior. This time, however, consumers are driving sales rather than the extreme incentives offered to set the last record. Sales last month grew overall 3.4% to an annual rate of 17.4 million autos, just 100k vehicles short of last years record of 17.5 million. Honda and Nissan saw the greatest manufacturer growth in sales with increases of 14.4% and 12.8%, respectively. Other companies saw growth under 10%, which is still impressive and hints the economy is still recovering from the great recession. Toyota’s RAV4, a small
SUV, saw a growth of nearly 32%. At the same time, Ford saw a 22% increase with the Explorer, a larger SUV. Overall, large cars outsold smaller cars across the U.S industry and were greeted with higher demand. With buyers flocking to bigger and less fuel efficient cars, manufacturers may have to offer incentives to push smaller cars off lots and keep the fleet-wide fuel efficiency levels within regulation. While sales did grow, overall growth is slowing down and is not expected to pick up to previous levels. In 2016, the average car has been on the road longer than in any other time period. It is expected this number will only grow as it has for the last 20 years.
It’s interesting that without the looming threat of an increase in domestic gas prices, the historic trend of U.S. markets to prefer larger vehicles resumes.
And resumes “in spades” – I’ll post the graph later, or (better) create a link to FRED.
Considering the final two sentences of the blog post: “In 2016, the average car has been on the road longer than..past 20 years,” I am curious to see how long it will take for autonomous cars and hybrid and electric cars will take over the market, if ever. Specifically with autonomous cars, how can they account for the differences in human judgement as opposed to machine judgement if not all cars on the road are autonomous. I also want to do some research about how do car manufacturers market their cars to incentivize people to abandon their trusty truck to buy a smaller, more fuel efficient vehicle or a new truck in general if they are not susceptible to the keeping up with the Jones’s mechanism.
Exactly the question Mr. Belzowski at UMTRI has tried to answer. The result: at least 25 years, because it’s not just fleet turnover but also in the first 10 years sales will ramp up from a very low level (maybe < 100,000 in the first year, < 1 million in year 5 due to production constraints and model rollout cycle).
I think this article touches a bit upon the common trend in America where consumers would rather go for size then fuel efficiency. Whether it be for safety, for power, or for looks, the typical American is leaning more and more towards trucks, specifically light trucks. They are choosing these vehicles over small vehicles that are more fuel efficient. I wonder if there is anything in the near future that may switch this trending choice by Americans.