Bacon's Rebellion

Does the Dip in Auto Sales Portend a Shift in Driving Behavior?

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by

James A. Bacon
in

After peaking last August, the six-month moving average of automobile sales in Virginia declined precipitously through February 2006, although the number has ticked back up since then, according to figures compiled by Chmura Economics & Analytics for VA Newswire for publication Wednesday.

The economy is growing and incomes are rising smartly. What could explain the dip other than the rising price of gasoline? Could this be a sign that Virginians are willing to modify their behavior in the face of the higher cost to own and operate a motor vehicle? Could this presage a downturn in the growth in Vehicle Miles Driven?

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3 responses to “Does the Dip in Auto Sales Portend a Shift in Driving Behavior?”

  1. Ray Hyde Avatar
    Ray Hyde

    The economy is growing and incomes are rising smartly. Historically both of these conditions have been matched by an increase in driving. Driving today, despite current gas prices is cheaper in real dollars than it was in 1970, except maybe, for the congestion tax.

    There is no reason to believe that these conditions will be concurrent with a lessening of vehicle miles driven. There is not even any reason to wish for less vehicle miles driven, as long as the value of the trip exceeds the cost.

    Less pollution, yes. More efficient vehicles, yes. Traffic management policies that work to decrease the waste, yes. But none of those necessarily equate to fewer VMT. What we should consider is wasted VMT and wasted energy, but not what amounts to peoples freedome to associate.

    When Henry Ford was born, 2 out of 8 people lived in urban areas. By the time he died 5 out of 8 people did. Autos have been the great enablers of the urban areas you so often espouse. Autos and tractors have enabled us to abandon to a wild state formerly cultivated areas.

    Today, the energy department released a report predicting a massive increase in the use of fossil fuels between now and 2030. Oil will still be king but there will be an enormousincrease in the use of coal. Renewable energy sources an nuclear will increase in absolute amounts, but will remain at around 9% and 5% of energy creation respectively.

    If you think that people with money in their pocket are going to freeze in the dark or walk when they can ride, then you really are a dreamer. You will have to pry that gearshift out of their cold dead hands.

    If you are looking for a reason for a decline in auto sales, it might be because so many families already have two or more vehicles.

  2. Jim Bacon Avatar
    Jim Bacon

    Ray, you said, “If you are looking for a reason for a decline in auto sales, it might be because so many families already have two or more vehicles.”

    I would like to think that’s the reason. One of the factors pushing Vehicle Miles Traveled ever higher over the past 50 years has been the steadily increasing percentage of the 16-and-over population possessing a driver’s license and owning a car. If the number of potential drivers — and cars — has plateaued, then that’s one less factor propelling VMT higher. VDOT will have to recalculate its traffic forecasts.

    Of course, it is way too early to tell if the downturn in auto sales is a blip or a long-term trend.

  3. Ray Hyde Avatar
    Ray Hyde

    I think it could be a factor, especially after the years of deep “rebates” to buyers.

    I still don’t think VMT means anything if you take it out of context. I drive a hybrid which shuts off when I stop, but otherwise, I’d probably rather drive an extra mile than idle an extra minute.

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