Sunday, March 29, 2009

Auto Sales and Vehicles per Driver

Over at Calculated Risk there have been several posts on the auto sales numbers as that data has been released. CR's take (link to the latest post: HERE) has been that the fleet turnover ratio, currently at a record 26.8 years is unsustainable and believes that the correction in this value will take the form of an uptick in auto sales rather than a decrease in the fleet size. The comments have been in disagreement with this outlook far more than is typical for a post over there. The comments section has typically evolved into a "I've got a 1982 Honda that I've driven around the world 18 times and expect it to make another 2 trips," sort of thing. Not exactly hard evidence. There was one comment in the last string about 2 car families becoming 1 car families. This is far more interesting.

I decided to try to dig up the data on licensed drivers and the registered vehicles to see if there has been a change in the ratio or anything that would remotely resemble a historical "norm.

Here are the charts: the first one containing the data on licensed drivers, passenger cars and trucks along with one line combining those last two. Motorcycles are omitted because in the more recent sources they are not found broken out separately as in the earlier reports. (See the source links at bottom.) Also note that until 1990, the year axis is ticked off in increments of 5 years and then in 1 year increments.

The second chart shows the ratios of passenger cars to licensed drivers and passenger cars + trucks to licensed drivers over the same period. Early on in these data sets, there is a shift in the categorization of trucks and so these early points are omitted. I don't think it matters in the final analysis anyway.

One interesting thing is the decline in passenger cars and the rise in the cars + trucks ratio. I am assuming this represents the change in vehicle mix as the SUV came to be such a dominant class. However, I did not dig very deep into the specifics of the classifications in this case. The most important thing to note is that the ratio of vehicles to drivers is greater than 1 and the 2007 ratio stood at 1.19 vehicles per driver in the US. In 2001 (the last data I can find), the percentage of households with 3 or more vehicles in the US was 23.6%.

If there really is a new sense of frugality that creeps into the American household budget it does not take a great leap to imagine that the ratio of vehicles to drivers might actually fall back closer to 1. This could get even worse if the low interest credit that the automakers have been providing courtesy of the government disappears since it seems very likely that consumer credit is going to be significantly reduced in the coming year. (And justifiably so.) At any rate, simply because the fleet turnover rate has reached a hitherto unknown height does not necessarily imply that auto sales will push up. I think the data and change in patterns argues for a much closer examination of the possibility that the vehicle fleet is reduced.