Has the US hit a 'car saturation' point?

America: No longer home of the car?

America, home of Ford, Chevy, Dodge and Chrysler, may have hit a car 'saturation' point, as the US Department of Transportation (DOT) reports that there has been a massive decline in car ownership since records were first kept in the 1960s.

According to the report from the Earth Policy Institute, 4 million fewer vehicles were on the roads in 2009 with only 10 million cars being purchased, compared to 14 million being sent to the scrapyard (the first time cars scrapped exceeded new car sales since WWII). For a country renowned for its love of cars, this is a massive deal leading many to speculate on the reasons behind America's seeming divorce with the car.

What's driving poor car sales?

Whilst the Cash-for-Clunkers scheme provided US car makers with a slight respite, car ownership in America has been slowly dropping, with factors being named from high gas prices, to the increase usage of public transport to even the younger generation relying on social networking technology rather than face-to-face contact.

However, car ownership has dipped before - in 1991 - and it quickly picked up again afterwards. Back then though, car numbers only fell by a million, so what else could be contributing to America's apparent apathy to the car and what could this mean for the economy overall?

The report from the Earth Policy Institute names issues like climate change, frustration with traffic and a "declining interest in cars among young people" as some of the reasons, but could the fact simply be that the US has has 246 million registered motor vehicles for 209 million licensed drivers - a rate of 5 vehicles for every 4 drivers. Could the market simply be over-saturated and this is simply the country's 'peak car' rate?

It's happened in countries before. In 1990, Japan, a country much more densely populated and highly urbanized than the United States, reached a similar saturation and since then car sales have shrunk by 21 percent. Could this simply be the beginning of such an event for the US?

After all, most people now live in cities, which are equipped with, on the whole, decent public transport systems. As such, people need cars less and less to get to work and if they do, could the experience be becoming increasingly frustrating? In 2007, the Texas Transportation Institute reported that US congestion costs, including fuel wasted and time lost, climbed from $17 billion in 1982 to $87 billion that year. With that much money going to waste, is it no surprise that people may be switching to public transport?

Could it drive America into debt?

With the US economy heavily affected by car production and usage, what could this mean for the American economy? With a shrinking amount of cars on the road, but new cars having improved fuel efficiency the future would see more of the declining oil use that has been happening since 2007.

If job were lost to a failing auto industry, then in theory there would be more capital retained from oil sales to invest in job creation within the United States.

On an environmental scale, the reduction in cars would mean less air pollution and fewer respiratory illnesses, more exercise and less obesity reducing, in turn, health care costs. With less money spent on roads and garages, more could be spent on public transport and high-speed rail systems, so in theory whilst in the short-term the reduction in car purchases could be a bad thing for the US, it could be a benefit in the long-term.

Image from U.S. Car Fleet Shrank by Four Million in 2009 - After a Century of Growth, U.S. Fleet Entering Era of Decline

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