CNN – Detroit’s auto bubble pain:
Another sign of just how out of whack the market got by the middle of the decade was that there were far more many vehicles on the road than actual registered drivers. This has long been the case, due mainly to the number of cars and trucks owned by businesses. But that gap grew much wider during the boom years. In 1998, there were about 12 million more vehicles than drivers in 1998. By 2006, the difference grew to 34 million.
That kind of imbalance couldn’t be maintained, even before the economy fell off a cliff. To that end, U.S. sales slowed to 16.1 million in 2007 and have plunged this year thanks to high gas prices earlier in the year and then the credit crunch.
Sales are now at their worst levels in 25 years, with a seasonally-adjusted annual rate of only 10.5 million vehicles in October. And when adjusted for population, GM said October was the worst month for the industry since the end of World War II.
The article blames easy credit for creating an auto sales bubble, with carmakers foreign and domestic ramping up production to meet newfound demand caused by refinancing and low-interest loans.