Recent increases in vehicle miles of travel (VMT) after declines in 2008 and 2009 has sparked hope that new vehicle sales will quickly find stronger underlying support as vehicles literally wear out. The increase in VMT is definitely good news, but it must be kept in perspective.
Total vehicles miles of travel year-to-date through July was up (0.4%), however, VMT is still off 1.4% from the peak reached in 2007. Likewise, the 12-month rolling total of VMT in July was up 0.4% from 2009, but down 1.5% from 2007. So, simply put, relative to 2007, we are racking up fewer total miles, those miles are being spread across more vehicles, and each of those vehicles is capable of considerably higher lifetime miles. That’s hardly a prescription for a sudden wearing out of vehicles.
Additionally, vehicles that literally wear out do not create new vehicle demand, they create used vehicle demand – which, to be sure, works its way up into new vehicle sales, but let’s not unrealistically accelerate the process. Furthermore, an estimate of scrappage over the long term is better provided by simply looking at actual scrappage relative to vehicles in operation. That trend is shown in our 9/28/09 blog post.
The assumption that increased VMT leads to more crashes (i.e., more salvage auction and auto repair business) is also tenuous. Recently released traffic statistics showed that total vehicle crashes declined by 5.3% in 2009. Better drivers (stricter enforcement of anti-drunk driving laws) and better cars (enhanced accident avoidance features) have pushed crashes per mile of travel to an all time low.