Pent-up auto industry demand just starting, Citi analyst says

But Mr. Michaeli noted that 74 percent of all vehicles being removed from operation are between 11 and 23 years old. And the rate of scrapping is highest among vehicles 13 to 17 years of age, he said. This year, that's 1997 to 2001 models, just at the beginning of that wave of high volume.

"We should care less about the age of the fleet and more about the age of what's being scrapped," he said.

He acknowledged that not all scrapped vehicles are replaced. And current trends of Americans driving fewer miles a year and buying fewer vehicles per household will blunt the scrapping cycle's effect.

But higher scrapping rates over the next several years should positively affect new-vehicle sales the rest of the decade.

Mr. Michaeli often has an unconventional take of the auto industry, driven by Citi's proprietary data. Each year, Citi polls U.S. drivers.

"It's pretty simple," Mr. Michaeli said. "We ask how many vehicles in your household, how many do you expect to have in two years, and why."

He also challenged the notion that lower large pickup penetration — it's fallen from 14.8 percent of total U.S. sales in 2004 to 11.7 percent of 2013 sales — because personal-use buyers have abandoned the segment.

"If that were true, we'd see multi-vehicle households selling or trading big pickups, creating excess supply and lower used prices," he said. "But that hasn't happened." Used prices for big pickups are higher rather than lower. And big pickups account for 14 to 15 percent of U.S. vehicles in use.

So big pickup demand is simply delayed, Mr. Michaeli concludes.

"As that sweet spot of scrapping vehicles at 13 to 17 years hit," he said, "we expect demand for big pickups to rise more than the [industry] average."

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This report appeared on autonews.com, the website of Automotive News, a Detroit-based sister publication of Tire Business.