Sunday, April 5

Want vs. need

...for more Americans the car is becoming a longevity-driven commodity like the Maytag washing machine. New-vehicle sales fell 38.4% in the first quarter compared with the year-ago period, according to Autodata Corp. A recently released annual survey from R.L. Polk & Co. found that the median age of American vehicles in operation has risen to a record 9.4 years from 9.2 the previous two years.

And perhaps most worrisome for the industry is the recent disappearance of that iconic American character: the new-car enthusiast, otherwise known as the tuner, motor head, speed freak, buff, nut and zealot. The percentage of trade-ins newer than two years had hovered for years between 9% and 10%, says J.D. Power and Associates. Last year it slipped to 8.4%, and in the first two months of this year it fell to 6.6%, says J.D. Power.

The worst recession in recent memory has a lot to do with that. When unemployment rises and investment portfolios decline, new cars are a clear target of cutbacks.

There are other factors. Back in the 1960s, '70s and '80s, buying a new car every year or two was a tradition for many Americans...

Now, however, the instant a new car is driven off the lot its value can drop as much as 30%, perhaps twice the depreciation rate of the 1970s.

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