According to a recent article in the Wall Street Journal, sales of cars and light trucks in the U.S. likely set a record for 2015 at around 17.5 million vehicles, leading to the question of whether 2016 sales might eclipse the 18 million vehicle mark. Economic signs point to 2016 being the healthiest domestic auto industry in decades, thanks to an improving labor market and low interest rates greasing U.S. demand. The industry has come a long way from the depths of 2009 when, in the wake of recession, only 5.8 million vehicles were sold. Cheap gasoline is also spurring sales, especially trucks and sport-utility vehicles. The fuel for our vehicles, which must be pulled from the ground from ever greater deaths, then transported, refined at a billion dollar facility, then transported again before it ends up in your gas tank, is today cheaper than fresh milk. What abundant times we live in!
What does this mean to the automobile consumer? One take is that automotive dealers will be well-motivated to satisfy this bursting 2016 demand. They’ll offer better service and better products to their customers so that they can capture more of the pie. Another impact is macroeconomic, that this high level of vehicle manufacturing will drive the national economy because so many key industries serve the industry (electronics, steel, rubber and plastics to name four). And if these market sectors thrive, then those that service them – everything from information technology to garbage collection – are along for the ride. In fact, according to the Center for Automotive Research, every job in the automobile manufacturing industry creates 7 jobs in other industries.
That’s leverage. Even if your particular profession is completely divorced from the automobile industry, the rising economic activity it helps fuel will be a plus for you.
There’s more. The auto industry spends $16 to $18 billion every year on research and product development – 99 percent of which is funded by the industry itself. That figure not only represents technical – and thus, often highly compensated positions, but advances society. The gadgets, circuits and processes developed by the automobile industry often end up in other products, making our lives easier and more efficient. The automobile industry continues to offer more sophisticated features for less cost, especially when they are measured in constant dollars. In the1980s, Porsche spent millions developing variable torque all-wheel drive for its 959 supercar. Thousands of laboratory and test track hours went into its development, which was partially reflected in the 959’s price.
Partially because it was rumored at the time that Porsche lost money on every 959 it sold since it was unable to fully recoup these costs without making the car astronomically expensive. Still, the price of a 959 was in the hundreds of thousands of valuable 1988 dollars. Today, you can drive a domestically-produced variable torque all-wheel drive vehicle, which has both performance and safety benefits, for just a few thousand dollars more than a conventionally driven car.
You may be saying “wow” to yourself right now. Your car or truck is not just about getting to work. The industry that produces it is an engine of technological progress as well as an economic driver that enhances your life in transparent ways. They may not be readily apparent but are there, methodically moving forward.
If you can’t quite comprehend the scope of this paradigm, you can fall back on your well-worn emotions of vehicle ownership, which for most of us have been a source of life-long satisfaction.
Like how your vehicle makes you feel when you roll up on a swank restaurant, the valet and other diners admiring with a glance. Your vehicle shouts that you’ve arrived, both to eat and in life.
Or how your vehicle protects you and your family from hazardous road conditions and when mishap is unavoidable, cocoons all of you from the forces of impact. Fatalities due to vehicular accident have been on a steady plunge since the 1950s. If some of you older readers have any doubt as to how automotive safety technology has changed, think back to the Triumph Spitfire or the Ford Pinto. Back then, the automotive industry fought safety enhancement. Now, they chase 5 star ratings from the National Highway Traffic Safety Administration as fervently as Fido chases a Cadillac down the road. Or how your vehicle has the ability to whisk you across considerable distances, thanks to its abilities and an extensive road network. A hundred and thirty years ago, a journey from Denver to San Francisco took weeks with untold hazards. There was no guarantee you would survive
it. Today, you drive it comfortably and safely in two days, all while sipping a latte and listening to Chopin.
Yes, abundant times. Think about that next time you drive to work.