Car Sales Are Down--And Here's Why

Jim Motavalli

Jim Motavalli | Sep 02, 2016

Until very recently—as late as July—it looked like there was nowhere for auto sales to go but up. The Detroit News wrote that month, “Industry experts forecast automakers will sell between 17.5 million and 18.1 million vehicles this year, besting last year’s 17.47 million vehicles, which broke the record of 17.41 million set in 2000.”

The banner sales were, as last year, being driven by “hot-selling pickups, sport utility vehicles and crossovers.”

Is 122,000 a lot of miles? Not for a 2007 Honda Fit. I'm keeping it. (Jim Motavalli)

Geez, what a difference a month makes. Now the so-called seasonally adjusted annual sales rate projects annual sales below 17 million, resulting in a retreat—but still a fairly decent year. August sales were not so great, with sales tumbling 3.5 percent compared to the same month in 2015. Down more than five percent, month over month, are Ford, Toyota, Nissan and General Motors.

The New York Times posited that the decline probably signals, after a six-year boom, “the end of the pent-up demand among consumers who put off replacing their aging vehicles during the depths of the recession.”

I agree that’s a factor—we saw it after World War II, ending four years when carmakers were making tanks and airplanes. The boom continued right through the 60s. But there are other things happening here, such as:

Longevity. You know that guy who bought a new car every year? He’s toast, or at least aging out of the car-buying public. The average age of light vehicles on the road now is 11.5 years, reports IHS Automotive. People are keeping their cars for an average of 6.4 years. "As long as we have tracked average age, it has gradually risen over time due to the increasing quality of automobiles,” IHS says.

It's an oldie but a goodie! Why trade it in? Besides, the Big Three are limiting my convertible options. (Jim Motavalli)

That’s an important point, and it’s one I recognize in my own family. We bought a new Honda Fit in 2007, and it has been a faithful and mostly trouble-free steed. Mileage: 122,000. Cars rarely lasted that long in the bad old days. In the 30s, for instance, 60,000 miles was time for an engine rebuild, and at least until the 1990s rust was usually terminal (at least in the Northeast and Midwest) before 10 years were up.

So we could buy another new car, but the Fit isn’t using oil, and it still looks good, in and out. We could buy another Fit, but why? I think it has another 50,000 miles to go. Besides, we have two kids in college. I think a lot of people are going to the showrooms, but then taking another look at their bank balance and their current bucket of bolts. And they’re putting off the big purchase.

Choice. I think the carmakers have gotten so intoxicated by the hot-selling crossover category that everything else is getting short shrift. Here are a few categories that are pretty bare these days—minivans, convertibles, sports cars and station wagons. I hear you, these are “niche markets.” But if you put a few of them together you have some pretty substantial segments.

Again, I could cite my own fleet. I own a 1999 Mazda Miata. I love it, but if I wanted to replace it I’d probably just buy another Miata (and the new one is great). The Fiat 124 Spider is a possibility, but it's mostly Miata under the skin. Toyota no longer makes the MR2 Spyder, alas, and Honda’s spectacular S2000 is also history—old ones are still commanding top money. I think I’m keeping my ‘99.

I could buy another Miata, or a Fiat 124--but that's really a Miata anyway. Nah, I'm playing the cards I have. (Jim Motavalli)

Cost. The price for the average new car keeps going up. The average transaction price for a new car was $33,666 earlier this year. That’s a lot of scratch. The MSRPs may be lower, but lard on the options and it adds up fast. Massage seats? Check. Bose infotainment? Check. Rhinestone-studded key fob? Check. I dunno about you, but I have other things I need to spend money on.

The Joneses. The family next door used to keep an eagle eye on your driveway, to see if you were keeping up with them. Now they don’t give a darn what you drive. I was driving a Maserati for a week, and they just said, there goes Jim.

I could add that people are worried about the future, what with November 8 looming, and that tends to put a hold on big-ticket purchases. 

Do you have an older car you've decided not to replace? Tell us why in the comments.

Get the Car Talk Newsletter

Got a question about your car?

Ask Someone Who Owns One