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Average Age of Cars Rises to 12.1 Years - Study Shows
Average age of cars rises to 12.1 years: Study
The average age of cars and light duty trucks in the United States has risen to 12.1 years this year, according to new research from IHS Markit. The average age has increased by nearly two months during 2020 and was elevated by the COVID-19 pandemic, the study found, adding that the increase in average age will “further drive vehicle maintenance opportuni es from an increasingly aged vehicle fl eet.”
The pandemic caused a “dras c reduc on” in new vehicle sales as well as a sudden increase in vehicle scrappage, which was a catalyst for increased velocity in the growth of the average age of light vehicles, IHS Markit said. But this trend is expected to be short-lived with 2021 seeing a return of new vehicle registra ons and increased ac vity in used registra ons.
“2020 was a radical departure from the norm and challenged assump ons about how vehicle owners use their vehicles and accumulate miles,” said Todd Campau, associate director of a ermarket solu ons at IHS Markit. “From a vehicle fl eet perspec ve, one of the real surprises was the number of vehicles that suddenly exited the ac ve popula on.”
According to the analysis, the rate and mix of vehicles leaving the popula on point to the possibility that the volume may be infl ated due to a larger percentage of vehicles that may not have been registered due to lags in state requirements for registra on renewals, more vehicles being put into storage due to COVID-19 restric ons in many loca ons, and work from home ini a ves, the study found.
While new vehicle sales proved resilient in 2020, the most signifi cant impacts to vehicles in opera on from the pandemic were felt in the rate of vehicle scrappage and vehicle miles traveled. Scrappage, the measure of vehicles exi ng the ac ve popula on, saw its highest volume in two decades at over 15 million units, and second highest rate at 5.6 percent of vehicles in opera on. Vehicle miles traveled declined year over year by over 13 percent in 2020 due to lockdowns and work from home policies.
“Typically, an increase in scrappage rate would be expected to be a headwind to average age, but coupled with the lower new vehicle sales and reduced vehicle miles traveled, the combined impact proved to be a tailwind,” IHS Markit said.
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Continued from Page 34 Looking forward
This year off ers two related factors that are expected to mute average age growth, according to IHS Markit analysis. The ongoing microchip shortage is expected to con nue to challenge new vehicle produc on volumes through the fourth quarter 2021, but rounding out the year, IHS Markit expects U.S. light vehicle sales to reach 16.8 million according to current forecasts, which can be expected to mute average age growth. In addi on, during the height of pandemic, some vehicle owners may have allowed registra ons to expire because their vehicles were not being driven.
“The microchip shortage and subsequent inventory levels for new vehicles have created a situa on in which used vehicle values have go en extremely high, so a vehicle owner who may have kept a vehicle in the garage that they were not using in 2020, now instead may take advantage of the opportunity to either reduce the number of vehicles in their garage, or trade up to something newer while the demand and value is extremely high on their used vehicle,” said Campau. “This is great news for the a ermarket as subsequent vehicle owners typically have a higher propensity to use independent repair shops for necessary maintenance and repair.”
The combined impact of the factors at play in 2020 led to the fi rst decrease in vehicles in opera on since 2012, with 279 million vehicles in opera on as of January 2021, down from nearly 281 million a year prior. That said, the industry is entering a period of strong growth in the a ermarket sweet spot — those vehicles 6-11 years of age — as record sales years begin moving into that age group over the next fi ve years.
In addi on, electric vehicles con nued to increase, with strong registra ons through 2020, IHS Markit found, pushing total electric vehicles in opera on to near 1 million units. The average age of electric vehicles in the U.S. is 3.9 years of age and has been hovering between 3.8 and 4.1 years since 2016 as the volume of new registra ons of electric vehicles con nue to represent a large share of overall EV vehicles in opera on.
Nearly 90 percent of 2016-2020 model year EVs are s ll registered by their fi rst owner, as compared to 68 percent of gasoline vehicles for those same model years. As EV’s begin to gain more market share and become more prominent in the used vehicle market, it is expected that their average age will begin to increase. At that me, the a ermarket will begin to see repair opportuni es shi in response to the increased EV market share.
