Odds are the vehicle in your driveway has been around for quite some time, the average vehicle on U.S. roads now 12.2 years old, according to new research.
This is the fifth year in a row that the average vehicle has increased in age, according to the report by S&P Global Mobility, rising by two months from just a year ago. The pandemic and semiconductor shortage are major factors in the aging of the American fleet, making it more difficult for potential buyers to find new vehicles or even relatively new, previously owned models.
“The global microchip shortage, combined with associated supply chain and inventory challenges, are the primary factors pushing U.S. average vehicle age higher,” a summary of the report explained. “Chip supply constraints have caused continued parts shortages for carmakers, who have been forced to cut production.”
Passenger cars aging faster than light trucks
The impact has been backed up by sales numbers that saw new car sales tumble to their lowest level this year during April. As a result, motorists by the millions switched from new to used vehicles or kept their existing models in use longer than they might originally have intended, the analysts noted.
The study indicated sedans, coupes and other passenger cars are now the oldest vehicles on the road, averaging 13.1 years. SUVs, crossovers pickups and other light trucks are a slightly newer 11.6 years of age, on average.
The average age of today’s vehicle fleet has actually declined in one niche segment of the market, according to S&P. Sales of battery-electric vehicles surged by 81% last year. So, with relatively few used EVs available, most of the demand has been filled with new vehicles.
EVs counter the upward trend
“The average age of electric vehicles in the U.S. is 3.8 years of age this year, down from 3.9 last year,” said the report summary. “As the volume of BEVs increases, it will mean their average age will increase.”
The increasing age of the U.S. fleet might have been impacted by the pandemic but the trend has been underway for quite some time. Back in 2010, as the country was in the depths of the Great Recession, the number was around 10.6 years, according to industry data. With millions unemployed and car sales plunging to near-record lows, the average age surged past 11 years in 2012 and has continued rising. Even the subsequent economic rebound barely slowed down the trend.
In one of the new report’s more curious footnotes, the pandemic impacted the age of the fleet because it “drove consumers from public transport and shared mobility to personal mobility. As a result, “since vehicle owners couldn’t upgrade their existing vehicles due to bottlenecks in the supply of new vehicles, the demand for used cars accelerated — boosting vehicle average age further.”
A mixed bag
The aging of the U.S. vehicle fleet is something of a mixed bag for the auto industry. While sales have fallen sharply, demand has remained high — in sharp contrast to what occurred a decade ago during the recession. That’s allowed automakers and auto dealers to raise prices and curb incentives, yielding record prices for many.
Meanwhile, S&P noted an aging fleet means “growing business potential for the aftermarket segment,” including replacement parts, as well as for service and repairs.
“Coupled with increasing average age, strong average vehicle miles traveled points to the potential for a notable increase in repair revenue in the coming year,” according to Todd Campau, associate director of aftermarket solutions at S&P Global Mobility.
Upward trend likely to continue for now
The unanswered question is how much longer the upward trend in vehicle age will continue. S&P expects to see another hike this year and next, as the semiconductor shortage lingers. As chips become more readily available, Campau said that then should “creat(e) the climate for average age to moderate or even reduce slightly.”
That is, of course, as long as the economy remains healthy and pent-up demand remains strong. A recession could keep the upward momentum going even longer.