Will Auto Sales Ever Get Back To “Normal”

Apropos to my post below, here is an article from the New York Times assessing the potential for the automobile market over the next few years. 

For all the drastic cuts and financial overhauls that are meant to secure a future for General Motors and Chrysler, their prospects in coming years will be determined more by the answer to a simple question: Can American drivers live without that new-car smell?

In recent years Americans appeared to be hooked on it and took advantage ofhome equity loans, easy credit and cheap short-term lease deals to send new-car sales to levels of more than 17 million a year.

Now the market has collapsed by 46 percent to below 10 million, as people are making do with the cars they have, leaving the industry to debate — and worry — about what the new normal will be once the recession ends.

The article is fine as far as it goes but never touches on the prospect for higher gasoline prices which I consider a certainty. There is no longer much of a love affair with cars among the American public and it quickly turns to hate when gas prices rise to the $4 a gallon level. It’s hard to imagine why the industry’s best days aren’t behind it. 

Some say the downturn is temporary and that sales will spring back in a few years. Others believe Americans will rethink whether they need so many cars, particularly new ones.

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