Buying a New Car

• Posted by Greg Harmon
• on June 17th, 2014

The automobile is incredibly important to the typical American. It has allowed the heart of America to drive right to the front door of the mini-mart to pick up another bag of Cheez-Its without spend much physical energy at all. If you wonder why Americans are the fattest country in the world look no further. Don’t believe me? Look at the typical population in cities versus how those far from cities look. No need to walk everywhere = fat people. But I digress.

We all saw how the Government had to bailout General Motors ($GM) during the financial crisis. There were a lot of things wrong with that and other car companies and some of it got fixed. But during that episode in time the American public stopped buying cars for a time. In fact they stopped buying most everything.

Fast forward to today and we are bombarded with the fact that the average age of an automobile on the road is at a record 11.4 years. For those of you that do not know this statistic stood at 8.4 years in 1995, 9.6 years in 2002 and 9.4 years in 2007. Cars were built to last longer so some lengthening of this statistic can be expected. But if you are General Motors or Ford ($F) trying to recover from bankruptcy or near bankruptcy it is not good news that the number is still growing.

Should it continue to grow through straight demographics? I do not know, I mainly look at charts and will leave this analysis to others. What I do know is that my 85 year old father’s cars is 16 years old and he is not going to buy another one, ever.

I am not a conspiracy theorist either but I do wonder often about what some see as mere coincidence. Perhaps it is my unique exposure to news that sees this statistic about the average age much more frequently, or maybe it is being discussed a lot more. Whatever the reason coincidentally the number of new cars sold is increasing. Not at record pace but increasing. But so is economic growth.

But something else has recently crept into the news. Recalls. It seems that everyday GM is recalling another 10 million cars. I may exaggerate there. But it is a lot and it is often. Most are for minor reasons but recalls none the less. Car companies used to kick and scream and do whatever it takes to avoid a recall. Not anymore though. Why?

What if it is part of a sales strategy? I have no knowledge of this or desire to research it. But a recall for a $10 switch imprints the owner that they have a lemon. And GM makes a lot more than $10 on a new car. Are the sales people at the major car companies becoming puppet masters, pulling our strings to buy a new car and get rid of our old ones? All you Sherlock Holmes types that uncover anything can give me a nod if it is true. Or just call me crazy.

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