Strong Pent-Up Demand for Cars in the U.S.

Special to The Auto Channel
From Seeking Alpha
By Dennis Ouellet, SeekingAlpha

A great chart from RBC Capital Markets(below) shows the historically large dichotomy between personal consumption of durable goods and production of consumer durable goods in the US. This is primarily the result of the auto crisis but it nevertheless highlights the significant decline in inventories in recent months.

A slight upturn in demand is likely to translate in a strong upswing in production and in manufacturing employment.

The average age of cars in the US is currently at a record high 9.4 years and while cars now last longer, 60% of people surveyed cite economic reasons for having delayed the purchase of a new vehicle.

Over the next few months, many factors could combine to spur auto sales:

Credit availability will gradually improve. Manufacturers will step up marketing and promotional activity. The US government is endorsing a “Cash for Clunkers” program which has had a great success in Europe (see my posthere).