Average age of cars and trucks on the road hits record: the circular problem for automakers

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How do you sell more new vehicles when they last longer each year? You don’t! Over two decades of stagnant vehicle sales interspersed with falls.

By Wolf Richter for WOLF STREET.

The average age of all cars and light trucks on the road in 2021 in the United States, regardless of how many times they’ve been swapped out, jumped about two months from last year, to reach a record 12.1 years, according to IHS Markit today.

“Average age” means that some of the vehicles are withdrawn from the national park at a much younger age, either because they were scrapped as a result of an accident or a natural disaster; or because they were exported as used vehicles. It also means that some of the vehicles on the road are much older, with a good group in their teens or older which, with good TLC, still perform well.

One of the reasons for the increase in the average age of vehicles over the decades is the improved durability of vehicles, imposed on automakers by finicky Americans in an ultra-competitive market where poor quality and low cost. inadequate durability can doom automakers – or at least crush sales for years. . Improving durability is a factor every year in increasing the average age.

But for 2021, there was the additional factor that also played a big role following the financial crisis: the 14% plunged into new vehicle sales last year reduced the number of new vehicles entering the national fleet. and thus increased the average age:

As the graph shows, new vehicle sales have been a very difficult activity in terms of volume: they essentially stagnated for more than two decades, interrupted only by deep falls.

One of the reasons for this stagnation in unit vehicle sales despite a growing population is that vehicles last longer and stay in good condition for longer and need to be replaced less often, so that the average age of vehicles in circulation does not. stop lying down.

The sharp drop in the number of kilometers traveled last year and at the start of this year, as shown in Federal Road Administration, may have been a further factor in the increase in the average age of vehicles in circulation, possibly having delayed the release of some of the older vehicles in the fleet, and also contributing to the decline in sales new vehicles last year.

The number of vehicles allowed on highways in circulation – passenger vehicles, buses, motorcycles, medium trucks and heavy goods vehicles – fell 0.5% in January 2021, to 279 million vehicles, according to IHS today.

During the Great Recession, the number of vehicles in circulation declined for two consecutive years (-0.7% and -1.6%); and they declined after the 2002 recession (-0.3%), according to data from BTS:

By the end of 2020, nearly a million electric vehicles were registered, according to IHS. Interesting fact: more owners hold on to their electric vehicle than owners of internal combustion engine vehicles. Among electric vehicles from the 2016 to 2020 model years, 89% are still registered by their first owner, compared to only 68% of ICE vehicles from the same model years.

The average age of vehicles in circulation has plagued car manufacturers and dealers for decades. In 1985, when I was just starting out in the business, there was already a lot of concern about the growing age of vehicles. It was a trend that couldn’t last and it would have to revert to some sort of average – that was the thought. At the time, the average age was 7.8 years. He never returned to any sort of average and is now 12.1 years old.

An eight year old vehicle in 1985, with normal kilometers, was quite old and worn. But those eight-year-olds held up even better than the Mustang 68 I bought in 1976. Things were falling, from the clutch linkage to the armrest, not to mention the carburetor leaking gasoline, the doors. that leaked water when it rained, the speedometer that had stopped working before I bought the car, the vinyl upholstery that was split in the driver’s seat….

These are just a few of the things I remember. I loved this car, it was my first car, it was only eight years old, it had a V-8 289, no A / C, 3-speed manual gearbox and no power, and it was a hunk of scrap by today’s quality standards. It was the worst car I have ever owned because every vehicle since then has gotten better every time. When I traded in my car last year which I bought new 14 years earlier, it had 160,000 miles, still looked good and ran smoothly.

This phenomenon is a circular problem for the industry. Americans demand vehicles that last longer, wear more slowly, and look good longer; and automakers compete to produce these vehicles in order to remain relevant. But it increases the average age of vehicles on the road, which reduces sales of new vehicles.

And the only thing left for the auto industry to grow is to raise prices and shift consumers to more expensive models, further reducing new vehicle sales as a decreasing percentage of people can afford. to buy them new at those prices – and they don’t. It doesn’t have to be because there are a lot of vehicles eight years and older that are in great shape and can afford.

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