Abruptness and depth of the 2020 mileage decline is much greater than anything previously recorded, report states; reduction in aftermarket product sales will be ‘record-setting’
Fort Wayne, Ind.—Annual mileage on U.S. roads will plunge by more than 12 percent during 2020, according to the latest projections by Lang Marketing. It will be only the seventh year since WWII in which U.S. mileage has fallen. The 2020 percentage drop in mileage will be more than six times larger than any previous annual driving decline over the past 65 years.
“Although monthly 2020 mileage deficits have narrowed (compared to last year) since the 40 percent collapse in April driving, Covid-19 will continue to slow the recovery in miles driven for many more months,” states Wednesday’s Lang report.
A summary of the analysis’ findings are as follows:
Forces that reduced mileage in previous instances
Reduced annual mileage during 1974, 1978, and 1979 was the result of oil crises that abruptly increased gas prices at the pump and caused fuel rationing across many areas of the country.
The story was different during 2008, 2009, and 2011, when the Great Recession of 2008, and the economic conditions that followed it, reduced annual mileage for an extended period. Unlike the three mileage downturns in the 1970s, there were no gas shortages. Lower annual mileage between 2008 and 2011 was the direct result of economic factors.
2020 mileage plunge is different and more severe
The 2020 mileage plunge is different in several important ways from the six earlier cases of lower annual driving:
• First, the abruptness and depth of the 2020 mileage decline was much greater than anything previously recorded.
• Second, there was no shortage of gasoline and pump prices remained low during the months following the outbreak of Covid-19.
• Third, shutdowns mandated in many regions of the country have caused widespread economic and social changes unrelated to any conditions that existed prior to the onslaught of Covid-19.
Magnitude of 2020 mileage decline
The reduction in 2008 driving was the largest annual mileage decline since WWII. The mileage reductions in 1974, 1978, and 1979 (caused by oil crises) averaged less than 1.0 percent. Annual mileage fell 1.8 percent in 2008, followed by an average 0.6 percent decline in 2009 and 2011.
The situation has been much different in 2020, when mileage plunged 28 percent in March and further in April, down 40 percent.
Although 2020 monthly mileage has since improved, it remained at double-digit deficit levels through August. The driving decline in September fell to 8 percent, but it has remained high year-to-date at 15 percent.
Driving decline duration
Driving retreated for a single year during the first oil crisis (1974), followed by a two-year drop (1978 and 1979) during the second oil crisis.
The mileage impact of the Great Recession of 2008 covered three years, with mileage falling in 2008 and 2009, followed by another drop in 2011 after a modest rebound in 2010.
While it is unclear how long the current mileage decline will persist, Lang Marketing expects December 2020 mileage will be down significantly from last year, despite the monthly mileage decline recently narrowing versus last year. Lang Marketing projects that the annual 2020 annual mileage drop will top 12 percent.
Aftermarket product impact of lower mileage
The impact of the 2008 Great Recession can provide some hints of what the consequences might be of reduced 2020 mileage on aftermarket product sales.
The 1.8 percent reduction in 2008 mileage resulted in 1.9 percent fall in light vehicle product volume, while the 0.6 percent decline in 2009 driving triggered a 0.5 percent retreat in light vehicle product sales at user-price.
Although 2011 annual mileage fell 0.6 percent, total aftermarket product volume climbed 2.9 percent during the year, propelled by an increase in the number of vehicles in operation (the first growth in more than four years) and a surge in vehicle average age.
2020 aftermarket product reduction
While the impact of the 2020 mileage decline is not yet clear, the report states that “there is no doubt that the reduction in car and light truck product sales will be record setting.”
Comments are closed.