The average age of vehicles on US roads rose to a record 12.1 years last year, as high prices and improved quality drive owners to keep their cars longer.
It was the first time the average vehicle age had risen above 12, according to data released Monday by research firm IHS Markit. While the average age of vehicles has risen steadily over the past 15 years, the trend accelerated during the coronavirus pandemic in part due to a drop in new car sales, IHS said.
The finding reflects the higher value of vehicles throughout their lifecycles, from the highest prices for new vehicles that Americans have been paying for years to the highest prices on the used car lot, Todd Campau said. , Associate Director of Aftermarket Solutions at IHS. Improving vehicle quality is also a factor, he said.
Whereas 20 years ago a car could have changed hands once or twice and lasted 100,000 miles, today it’s more common for a car to have multiple owners and last 200,000 miles or more, he said.
“That has extended the life cycle of the vehicle and created value for more buyers throughout the chain,” said Campau. “For that second, third or fourth owner, there is still meat on the bone.”
The increase in the average age of vehicles does not necessarily mean that Americans are giving up buying new vehicles and getting by longer with their current cars, Campau said. New vehicle sales have been running at a record or near-record pace for years, with the exception of a short-lived slump in the early months of the pandemic last year.
Instead, since they cut the financial crisis, more consumers have increased their number of domestic vehicles, buying a third car for the family rather than two, for example, Campau said. The total number of vehicles in operation in the US has increased about 10% since 2013, to about 279 million, according to IHS.
Increasing the age of vehicles presents an opportunity for dealerships and other companies that sell parts for vehicle repairs, such as brakes and tires, Campau said. In addition, more companies are offering aftermarket products to upgrade infotainment systems and other technologies in cars, giving owners of older vehicles the ability to connect their phones to the dash touch screen, for example. example.
As cars stay on the road longer, automakers are looking to offer after-sale digital services and features to generate recurring revenue, such as adding new applications to multimedia systems or new convenience features, such as driving with hands-free in some situations.
Ford Motor Co. CEO Jim Farley has said he wants the company to have a “permanent” connection with Ford customers and to break the traditional model of selling a car and simply waiting a few years before the owner come back for an update.
“As with your phone, new features will be added every hour, every day,” Farley said in an interview last month. “I think that’s where the real competitive race is.”
Average prices for new and used vehicles have reached recent record highs, having risen during the pandemic amid a supply shortage.
The average price paid for a new vehicle in May was $ 38,255, a record, according to research firm JD Power. New car prices have risen steadily since the financial crisis, but have skyrocketed over the past year as supply chain disruptions from the pandemic created a seller’s market.
Used car prices have also risen for years and have received an even stronger boost since the pandemic hit. Average used car prices rose 48% in May from a year earlier, according to an index compiled by auction company Manheim, Inc.
Write to Mike Colias at [email protected]
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