The auto industry dynamic is fascinating not least because the US is sucking up new and used vehicles as fast they can – driving the price inflation that we see in the exhibit below – but because this is happening at a time when many Americans are looking at lower vehicle utilization going forward as at least some of the working population will embrace the work from home opportunities that have been introduced because of the Pandemic. It is an interesting exercise to do in any part of the country, but we suspect that if you walk around any US neighborhood today you will find vehicles parked on streets and in driveways that look like they have not been touched, or have been barely driven in months. The argument that the vehicle is a sunk cost holds water in many cases, but the annual cost of insurance and maintenance makes no sense for a vehicle that travels less than a thousand miles a year, especially with low-cost alternatives like Uber and Lyft. See today's daily report for more.
Source: Manheim Index, Bloomberg, C-MACC Analysis, May 2021
