In a previous post, we discussed the current under building of residential housing units and how the longer that goes on the more demand for new home construction builds. A similar situation is occurring with our vehicle fleet in this country.
Karl Smith writes about this post at Modeled Behavior.
In discussing the significance of this chart
He says “The center of the distribution is moving rightward. This means not only is our vehicle fleet rapidly aging but that if vehicle production actually fell the scrappage rate would skyrocket in the coming years.”
In other words, either we are headed to a highly unlikely new reality of far fewer cars per capita, or demand is building for replacing cars much the same as with housing.
In a recent LA times article, Jerry Hirsch writes, “Consumers are heading to dealerships to replace aging cars. The industry estimates that the average age of vehicles on the road is approaching 11 years as people have delayed purchases because of the recession and more recently an uncertain economy.”
At some point the pent up demand for new cars (or homes) builds up enough so that consumers will begin to buy. And home builders and car manufacturers will then ramp up production and create jobs to meet that demand.
