Motor vehicles, model year 1992 - sales of new cars and trucks

Survey of Current Business, Oct, 1992 by Larry R. Moran

In addition, two long-term trends have dampened motor vehicle sales in recent years. First, since the early 1980's, the growth rates in the driving-age population and in household formation have slowed. Second, owners are keeping their vehicles longer; according to the Motor Vehicle Manufacturers Association, the average age of cars on the road climbed to 7.9 years in 1991 (the most recent year for which data are available), the highest level since 1950.

Another long-term trend that is related to the motor vehicle industry should also be noted. The ratio of consumer auto installment credit to DPI has fallen to 6.0 in 1992 from 8.8 in 1988. The decline may reflect increases in personal-use leasing and in auto purchases financed by home equity loans. By 1992, personal-use leasing accounted for 11 1/2 percent of new-car registrations and for 8 percent of new-truck registrations, according to R.L. Polk and Company. Since 1986, when changes in the tax law phased out interest paid on auto loans as a deduction from taxable income in calculating tax liability, an increasing number of consumers may have used home equity loans to finance car purchases, because they could stir deduct the interest on these loans.

New Cars

Sales of new cars declined 3 percent - the sixth consecutive decline - to 8.3 million units in model year 1992 from 8.6 million in 1991. Car sales had declined 9 percent in 1991, 8 1/2 percent in 1990, and 1 1/2 percent in 1989. Sales of both domestic and imported cars decreased in 1992.

Sales of domestic cars, which consist of both domestic-nameplate cars and transplant cars, declined 1 1/2 percent to 6.2 million units in 1992 from 6.3 million in 1991. Sales of domestic-nameplate cars declined 1 1/2 percent to 5.0 million after falling 11 percent in 1991. Sales of transplant cars increased 1/2 percent to 1.1 million after increasing 10 1/2 percent.

The market share (percent of total new-car sales) of domestic cars increased to 74 1/2 percent in 1992 from 73 percent in 1991: The market share of domestic-nameplate cars edged up to 60 1/2 percent from 60 percent (chart 3); their share had peaked at 69 1/2 percent in 1986. The slight 1992 gain may have partly reflected new-product introductions and quality improvements. The market share of transplant cars remained at 13 1/2 percent in 1992.

By size dass, the 1992 decline in domestic-car sales was more than accounted for by sales of middle-sized and luxury cars; sales of small and large cars increased. Sales of middle-sized cars declined to 3.0 million, but their market share was unchanged at 36 percent (chart 4). Sales of luxury cars declined to 0.6 million, and their market share declined to 7 percent from 8 percent. Sales of small cars increased to 1.8 million, and their market share increased to 22 percent from 21 percent. Sales of large cars increased to 0.7 million, and their market share increased to 9 percent from 8 percent.

Sales of imported cars fell 7 1/2 percent to 2.1 million in 1992 - the lowest level since 1978 - from 2.3 million in 1991. Sales of these cars had declined 12 1/2 percent in 1991, 10 percent in 1990, and 7 percent in 1989. The market share of imported cars declined to 25 1/2 percent in 1992 from 27 percent in 1991; their share had peaked at 30 1/2 percent in 1987. The recent declines in sales largely reflected shifts in production by foreign manufacturers from overseas plants to U.S. transplants; most of the models manufactured at transplants are the same as those previously manufactured overseas and then imported. The 1992 decline in sales may also have reflected the weakening of the U.S. dollar against the Japanese yen, which led to larger price increases for Japanese cars than for domestic cars.