Old Cars are the Best
May 16, 2023
Average Age Of American Cars Hits Record High
by Tyler Durden
Monday, May 15, 2023 – 08:00 PM
For the sixth consecutive year, the average age of vehicles in the US has risen, indicating that Americans are holding onto their cars for longer than ever before.
According to data collected by S&P Global Mobility, the average age of passenger vehicles on the road has reached a record high of 12.5 years. This trend, which began in 2017, has accelerated in a post-Covid world as new car prices soared due to shortages, and more recently, borrowing costs have skyrocketed, causing an affordability crisis. However, this trend might also suggest automobile manufacturers are producing higher-quality vehicles that break down less often.
“This is the sixth straight year of increase in the average vehicle age of the US fleet. It also reflects the highest yearly increase since the 2008-2009 recession, which caused an acceleration in average age beyond its traditional rate due to the sharp decline in new-vehicle sales demand,” S&P Global Mobility pointed out.
Todd Campau, associate director of aftermarket solutions for S&P Global Mobility, noted a confluence of factors from the pandemic supply chain snarls to soaring interest rates in 2022 “would provide further upward pressure on the average vehicle age.”
S&P Global Mobility forecasts new vehicle sales will be 14.5 million units in 2023, which is expected to slow the average age growth rate in the coming year.
“While pressure will remain on average age in 2023, we expect the curve to begin to flatten this year as we look toward returning to historical norms for new vehicle sales in 2024,” Campau said.
A plethora of used cars on roadways will benefit the vehicle service industry. An aging fleet means vehicles will require more repairs. Campau said:
“Traditionally, the ‘sweet spot’ for aftermarket repair was considered 6-11 years of age, but with average age at 12.5 years, the sweet spot for aftermarket repair is growing.
“There are almost 122 million vehicles in operation over 12 years old.”
As the Bloomberg chart shows below, only the auto parts business continues to register steadily higher top-line revenue.
Wall Street has priced in the auto parts boom as shares of AutoZone Inc have gone parabolic.
The auto parts industry is benefiting from America’s aging fleet of vehicles.