April 20, 2009 / 5:24 PM / in 8 years

America's road hogs veer off freeway, hop on bus

WOODBRIDGE, Virginia (Reuters) - The auctioneer bellowed, "Cheap, Cheap, Cheap!" as car jockeys steered shiny machines through the warehouse.

But there were few bidders at the usually popular weekend Woodbridge Public Auto auction. Most cars went begging, including a 2001 Mercedes-Benz sport utility vehicle that couldn't find a buyer at half of its $13,000 value.

From the movie "American Graffiti" to the song "Route 66," car ownership and the serendipitous pleasure of the highway have been a celebrated part of American life.

But several signposts suggest America's love of driving is stalling and may stay weak for a long while. This could have profound impact on gasoline demand and the U.S. auto industry.

"One thing that is very clear is that there has been this belt tightening, which has gone into every little corner of our lives," said Philip Reed, senior consumer advice editor at Edmunds.com, a portal for car enthusiasts. "I see people cutting back who don't even need to cut back."

Even as gasoline prices soared in 2006 and 2007, Americans were the kings of the road, driving over 3 trillion miles a year.

"We were road hogs," said John Townsend, spokesman for the American Automobile Association's mid Atlantic club. "It was widely believed that there was nothing that could be done to get Americans out of their cars. The encouragement, the exhortations and all that to take mass transit, they just seemed to fail."

But something is afoot. In 2008 miles driven fell by 3.6 percent. Rick Wagoner, long a backer of gas guzzling SUVs, has been deposed as the CEO of General Motors. The automaker has put its Hummer division, the mighty emblem of America's free driving ways, on the block. Sales at Hummer skidded 68 percent in March.

Americans took 10.7 billion trips on public transit in 2008, a 4 percent rise over the previous year and a modern record, the American Public Transportation Association said.

High pump prices probably spurred the initial surge in ridership, as gasoline topped $4 a gallon last July, Association spokeswoman Virginia Miller said.

But even late last year when gasoline prices fell, ridership posted the highest quarterly increase in a quarter of a century.

"It was as if people had started a new travel behavior, a new habit," Miller said. "And they have stuck with their habit."

Smart Consumption

With gasoline hovering around the $2 a gallon mark, will Americans be jumping back behind the wheel this summer? The U.S. government does not think so.

The Energy Information Administration projects that in the summer driving season, from April to September, gasoline demand will inch up to 9.1 million barrels a day from 9 million last year. That still lags 2007, when demand hit 9.44 million barrels a day.

Auto executives and analysts, including American Petroleum Institute's chief economist, John Felmy, believe gasoline consumption has peaked, meaning oil companies and the auto industry need to make fundamental adjustments.

Some warn the American consumer will revert to old habits if the economy roars back. Big parts of the United States still depend heavily on the car, and an auto industry under stress might not be able to meet demand for fuel-efficient cars.

"Any of these changes that we are talking about are not going to happen overnight. I would suspect it's a 15-20 year process as far trying to get over to more sustainable energy products, said Sam Bullard, Economist at Wachovia Corp.

Americans also have started to embrace car sharing. Zipcar, the world's largest car-sharing company that rents cars by the hour or day, saw its membership soar 50.3 percent in the past 12 months.

Zipcar chief executive Scott Griffith said he sees a major shift in philosophy that could stay in place for a long time.

"Smart consumption is the new black. It seems to go with everything these days," Griffith told Reuters.

He said his firm's surveys show people take 46 percent more public transit trips, 26 percent more walking trips and about 10 percent more bicycling trips after joining Zipcar.

"To me what their understanding is, I can live a more sustainable life and also save a lot of money by changing my behavior in some ways -- like using car sharing and driving less in total," Griffith said.

Editing by Jeffrey Jones and David Gregorio

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