Business columns: The myth of ‘pent-up demand’
This year, the demand isn’t pent-up; it’s just not there, said Jerry Flint in Forbes.
Dude, where’s my revival? That’s what many auto executives are nervously asking, said Jerry Flint, as they wait for their old friend—pent-up demand—to ignite a recovery in car sales. The demand is out there, they insist—the numbers say so. Before the recession hit, carmakers sold 16.5 million new vehicles in the U.S. every year. But then sales plunged to 13.2 million in 2008 and to 10.4 million last year, for a two-year shortfall of more than 9 million cars.
“The pent-up demand is the 9 million slackers” who didn’t buy a car in the past two years. They’ll soon have to return to the showrooms, say the execs, to replace their aging vehicles.
Well, maybe not. Cars these days are better made than they used to be and don’t need replacing as often. What’s more, with “general fear in the air,” people are paying off debt, not taking out car loans. And consumers are balking at high sticker prices, which now average more than $30,000. This year, the demand isn’t pent-up. It’s just not there.