With more than 250 million automobiles, Americans can be said to be among the most "car-oriented" people in the world; home to nearly one out of every three passenger vehicles, the United States has long been known as the single most important auto market in the world.

But that may be changing now, as the economy hits the skids and record numbers of American consumers are foregoing automobile purchases for the foreseeable future.

In fact, according to a March poll conducted by TechnoMetrica's AutoView (the company's automotive research division), demand for new automobiles among American consumers hit a new 14-month low, forcing their Auto Purchase Outlook Index down an unheard of 23 points, or 26%, to reach 65.6 (vs. 88.8 in February).

"With oil approaching $110 a barrel and a weakened job market to contend with, Americans are having little choice but to scale back on auto-related purchases," says Raghavan Mayur, president of AutoView, the automotive research division of TechnoMetrica Market Intelligence. "The difficulty in obtaining credit, housing worries and the continued slide of the dollar are not helping either."

The dampening of consumers' appetites for new vehicles followed the broader drop in consumer confidence registered this month by the IBD/TIPP Economic Optimism Index, which fell to 42.5 (down 4.5%), its third lowest reading in 86 months.

March's reading of the Auto Purchase Outlook Index is 27 points below its 12-month average of 93.

Note: Index readings correlate with demand and purchase plans for new automobiles. Higher index scores indicate higher demand, while lower scores indicate lower demand. The baseline score for the Index is 100, pegged on the average demand during February to April of 2007.

A Closer Look at the Numbers

AutoView tracks demand for new automobiles among 26 different demographic groups.

In March, demand increased among three of them while falling among 23.

Gains occurred among Westerners (up 1.7 percentage points), those aged 65 and above (+1.3) and those with annual household incomes ranging between $50K and $75K (+0.2).

The largest drops in demand for new automobiles occurred among black and Hispanic Americans (down 11.8 percentage points), Northeasterners (10.9), 45 to 64 year olds (-10.5) and those with annual household incomes above $75K (-7.5).

Further, approximately one out of ten (11%) American consumers indicated that they were very (4%) or somewhat likely (7%) to purchase or lease a new vehicle within the next 6 months - that's the lowest percentage since AutoView began tracking this data.

Most of those who indicated that they were likely to buy within six months plan on making their purchase within the next 4 to 6 months (69%), while smaller numbers plan on making a purchase within the next month (12%) or within 2 to 3 months (13%); 5% are not sure when they will be making their purchase.

Considering vehicle type, full-sized cars (19%) made the top of the list of vehicles buyers were most likely to purchase, followed by pickups (17%), mid-sized cars and small SUVs (15%, respectively).

By make, more than two out of five (44%) likely buyers say that they will purchase an Asian brand, while about a third (36%) are looking at American brands and about one in twenty (4%) are considering a European brand.

When consumers were asked to pick the brand they were most likely to purchase if they were to make their purchase today, 14% picked Toyota, while equal numbers said they would purchase a Dodge or Lexus (11% respectively, with both brands tied for second place). Honda garnered 9% of the vote; Ford and GMC each captured 4%.

Non-Luxury Market Contracts While Luxury Market Holds Steady

However, although the general market for automobiles is weakening, the luxury market has managed to sustain itself. In total, luxury brands were preferred among 22% of likely buyers, while 63% said they would purchase non-luxury brands.

That 22% is the highest reading ever and mirrors the changing structural makeup of the market, i.e., fewer non-luxury buyers have plans to purchase a new automobile while the number of luxury buyers has remained fairly steady.

Bolstering this finding is the fact that over the last 14 months affluent consumers have been more bullish on new automobile purchases than their less affluent peers, registering 50 points higher than those in the lowest income groups and about 30 points above middle income consumers.

A Need for Alternative Fuels

"Fuel and credit concerns appear to be the major factors here," Mayur says. "Both are hurting this market, as is the broader perception of a weakened economy, and the threat of a recession. But when looking at fuel, the economic factors are dovetailing with the prevailing social and political winds, together pointing to a real need for vehicles that can be powered by something other than gasoline."

As the United States' position as the foremost consumer of oil in the world begins to diminish and as demand becomes more evenly spread out among the fast growing economies of countries like China and India, it's unlikely that Americans will be enjoying cheap gas anytime soon.

And although there is little doubt that there are many factors making the case for the rapid adoption of an alternative energy policy among US lawmakers, the single most visible motive to the American consumer is the cost of oil.

Which is why for more than two years now, AutoView's surveys have consistently shown that three out of four US households are planning to consider an alternative fuel vehicle the next time they are in the market to buy or lease.

In fact, according to the latest data, 59 million consumer households say that they are going to be looking at hybrid vehicles the next time they are ready to buy or lease a new vehicle, while 48 million are thinking about ethanol vehicles and 23 million are thinking about diesels.

Dollars and Cents and Future Trends

In 2007, the US market for automobiles - including new and used cars and light trucks - was about $785 billion, an increase of just 0.7% over 2006 (vs. a 2006 increase of 1.9% over 2005). However, that 0.7% increase was largely due to growth of the used vehicle segment of the market rather than growth in new vehicle sales.

And while estimates vary, AutoView now expects total new light vehicle sales in 2008 to barely approach 16 million (although AutoView says it could even be less).

What's more, while used cars are forecasted to continue to pull in more potential buyers, trucks - SUVS and pickups - are forecasted to loose share.

This would be a continuation of recent trends in the US market, which interestingly enough is at odds with trends in the other two major North American markets - Mexico and Canada - where truck sales have been growing rapidly and staying pat, respectively.

According to AutoView, this is as much a reflection of rising fuel prices as it is a reflection on consumers' effective incomes - for Americans, rising fuel prices have effectively meant shrinking incomes. And what the past 40 years have shown is that as per capita income rises, the share of light trucks being purchased also rises, and vice versa.

That's something automakers heavily reliant on pickups and SUVs should take careful note of, especially as recessionary fears continue to mount.

About AutoView:
AutoView is the automotive research arm of TechnoMetrica Market Intelligence, a nationally recognized research firm and a leader in the publication of economic and industry-specific consumer confidence and purchase plan indicators. In addition to the Automotive Purchase Outlook Index, AutoView also publishes the Alternative Fuels Tracker, a quarterly tracking study that monitors the development and growth of the alternative fuel vehicle market. Each year, AutoView also publishes 30+ reports focusing on different automotive topics.