The out of towners
New York City is an expensive place to live in. The rents, the taxes, the food and entertainment, they all add up. But New Yorkers, particularly in Manhattan, can typically save money on automobiles.
Between walking, biking, public transit, taxi use and rideshares most households have little need to keep a car. That avoids regularly shelling out for petrol, insurance and parking. On the occasion that a car is needed to leave the city, rental options make more sense.
The pandemic, as with so many things, has upended this conventional arrangement. Dyed-in-the- wool New Yorkers have, perhaps surprisingly, reached for cars as a way to escape the city at a time that they do not trust the subway or buses. Others have decided their getaways will be local rather than transcontinental or transatlantic.
Data from New York’s Metropolitan Transportation Authority show how toll collection, a proxy for auto traffic, has rebounded sharply in and around the city. Traffic jams have become more common recently.
In the wake of a pandemic lockdown, automakers were forced to shut down production. But since Michigan assembly lines were reopened in May, the American auto industry has enjoyed a mini-boom. Cheap petrol and cash from government stimulus checks have Americans racing to auto dealerships, or even online, to bargain for a set of wheels and literally ride out the contagion.
The widely watched auto SAAR figure — annualised auto sales — remains slightly lower than its level from January. But after a collapse this spring, the recovery has been breathtaking. More importantly for Detroit, Americans are pumped up enough to buy gas-guzzling trucks and sport utility vehicles, all highly profitable models. General Motors chief executive Mary Barra said last week of its Chevrolet Silverado and GMC Sierra pick-up trucks: “We simply can’t build enough.”
Market share data, based on vehicle registrations, from IHS Markit show how “non-luxury traditional compact” cars fell out of favour just as “full-size half ton pick-ups” have filled the void.
Ford and GM have never been stock market darlings, even when auto sales boomed in the mid-2010s. Their bloated cost structures and economic cyclicality, along with the fear that eventually the global auto industry would have to shrink, kept Wall Street unenthusiastic.
But there is always room for one high-flyer in any business. Shares of Carvana, which sells used cars online and even through vending machines, have more than doubled in value in the past year. Its market value exceeds $35bn, more than that of Ford or Fiat Chrysler. Used-car prices have rocketed in 2020 following the surge in consumer demand.
But even with all these new purchases moving on to the road, overall, Americans are still not venturing far. Data from the US Department of Transportation show that vehicle travel — measured in billions of miles — is still off sharply from 2019. Maybe Americans want the freedom to hit the open highway rather than the reality of travel at the moment.