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In weak economy, the old car will do just fine

Here’s a potentially worrisome sign for carmakers and auto dealers: In the current weak economy, more than half of Americans recently surveyed said they’d put off purchasing a new car because of the financial burden.The American Automobile Association asked respondents if, in the past 12 months, they had decided to keep an older car because they didn’t want the financial burden of newer one.
2011 Chevrolet Cruze
2011 Chevrolet CruzeGM / Wieck / Today

Here’s a potentially worrisome sign for carmakers and auto dealers: In the current weak economy, more than half of Americans recently surveyed said they’d put off purchasing a new car because of the financial burden.

The American Automobile Association asked respondents if, in the past 12 months, they had decided to keep an older car because they didn’t want the financial burden of newer one. Fifty-four percent of those surveyed said they had.

The news comes as some automakers openly fret about whether economic worries are dealing a blow to consumer confidence, in turn causing potential buyers to shy away from a visit to the car dealership.

Even though U.S. automakers saw sales rise in July, executives said they are worried about high unemployment and other economic woes.

In addition, automakers are still recovering from the effects of the Japanese tsunami in March, which damaged carmakers and suppliers and left some dealers with few vehicles on their lots. That’s continuing to hurt some Japanese automakers.

On the other hand, used car sales appear to be faring much better.

Everyone knows the downside to holding on to an older vehicle: They break down.  The AAA phone survey of 1,000 people also found that nearly 4 in 10 of those surveyed could pay for a $2,000 repair with cash. The rest would either rely on credit cards or borrowing from other sources.

At the same time, however, about one-fourth of those surveyed said they’d neglected repairs and maintenance because of the weak economy.