If the 26-year-low sales rate in January seemed ugly, think again: Adjusting last months demand level for population makes the picture even worse.
The U.S. light-vehicle annual sales rate dipped to 9.8 million units in January, the lowest rate since August 1982. But adjusting that rate for 1980s population yields a demand level of 7.2 million -- lower than any on record.
In fact, the past four months have the lowest population-adjusted sales rates since 1970, said the auto information site Edmunds.com.
The next-lowest population-adjusted sales rate was in November 1970, when demand dipped to 7.4 million units because of a General Motors strike. Even that was an aberration. Demand in the 1970s, when U.S. population ranged from 205 million to 225 million, typically fluctuated between 12 million and 14 million units.
The rankings further corroborate what analysts are saying: Todays demand level is artificially low for a population that the U.S. Bureau of the Census says has reached nearly 306 million.
This decline cannot be because people cant afford cars, said Jesse Toprak, Edmunds.coms executive director of industry analysis. After all, the real wealth in the United States has not declined to 40-year lows, Toprak said.
Low consumer confidence has broken the demand structure, Toprak said. Consumers need a better housing market and a federal stimulus package that includes more specifics for the auto market. Bailing out automakers isnt the answer, he said.
You have to give [consumers] some sort of sense of security and stability. You have to give them some reason to go buy now, Toprak said. It cannot be accomplished by simply handing out money to automakers.
The more than $800 billion stimulus package Congress is considering already includes a Senate-added proposal to make auto loan interest and sales taxes deductible from federal income taxes.
The federal government already has given Chrysler LLC and GM $13.4 billion in loans, with a promise of $4 billion more to GM. To preserve those loans, the automakers must give the Treasury Department their restructuring plans by Feb. 17.