Auto Bailouts- Where’s the Demand for Cars?

carsIn the conversation about how to handle the collapse of the American auto industry, a key component of the discussion seems to receive little attention: Demand. Can we honesty have any hope of saving an industry that produces a product that is urgently needed by almost no one?

I used to be really into cars. I had VW’s, a ’69 Z28 Camaro, and a ’73 Triumph Spitfire. I enjoyed keeping these machines alive, fixing them up and otherwise relishing a bygone day of automobile style.

In 1999, my wife and I bought our first NEW car, a Subaru Impreza. It’s a modest, functional, fuel efficient car. The following year, we bought a Saturn SL2, also a modest, functional, fuel efficient car. Being young professionals, hauling around babies and groceries, and commuting, we felt having new cars was very important to us at the time. Those two cars might be the only new cars we’ll ever buy.

We’ve moved up to a minivan since then, but we bought it used. Our newest car today was built in 2002. Living where we do in California, automobile ownership is a necessity, but many urban dwellers have little or no need for cars, and many rural dwellers will be just fine with the cars they have for many years. Collectively, America doesn’t need new cars. There are millions of unsold new cars already. There are millions of used cars that will serve us for decades to come.

If we bail out the auto industry, who will buy the cars they build? If you haven’t saved the jobs, but you save the company, what have you really preserved?

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