Vehicle population rises, as does vehicle age

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The average age of vehicles on U.S. roads has never been this high.

According to a report from S&P Global Mobility (previously the auto team at IHS Markit), the average age of light vehicles in operation has climbed for five consecutive years, reaching a record age of 12.2 years as of Jan. 1, 2022.

That is up from just over 12.0 years on the same date in 2021, according to S&P Global. Cars are particularly long in the tooth (13.1 years) and trucks are at an average age of 11.6 years.

S&P Global Mobility attributes the aging fleet to a combination of the global microchip shortage and the subsequent supply chain and inventory disruption.

“The constrained supply of new cars and light trucks, amid a strong demand for personal transportation, could have influenced consumers to continue operating their existing vehicles longer, as inventory levels for both new and used vehicles were depleted across the industry,” the company said in a news release.

This hike has occurred even though there was a 3.5-million-unit increase in the vehicle population, which came in at 283 million, the research shows.

So how does that align with slowing new-car sales, which would indicate fewer cars being added to the fleet?

S&P Global Mobility explained that “units that left the fleet during the pandemic returned and the existing fleet sustained better than expected. Ultimately, more vehicles that were taken out of circulation during the pandemic returning to the fleet and increased residual values mean growing business potential for the aftermarket segment.”

And because of supply chain issues, cars are not being scrapped as often as they previously were, the company found.

More than 11 million vehicles were scrapped last year, resulting in a scrappage rate of 4.2% (as a percent of vehicles in operation), the latter of which S&P Global Mobility said was a two-decade low.

Meantime, the year before, more than 15 million units were scrapped (a two-decade high) and the scrappage rate was 5.6%, the second-highest rate in 20 years.

Looking forward, S&P Global Mobility is predicting that the next two years will see vehicle age continue to rise. That’s driven by the parts shortage impact on new-car production and sales, the company said.

And as vehicle technology continues to become more sophisticated, pressure on semiconductor supply remains as well, it noted. Not to mention any effects from the crisis involving Russia and Ukraine.

With not enough new-car supply to satisfy growing demand, that will “set the upper limit for scrappage rates,” a trend likely to drive average vehicle age higher, S&P Global Mobility said.

“While some of the new vehicle demand has been destroyed, as supply chain challenges ease, some pent-up demand for new vehicles is expected to be realized through the middle of the decade,” said Todd Campau, associate director of aftermarket solutions at S&P Global Mobility, in a news release.

“At that time, scrappage rates could increase, creating the climate for average age to moderate or even reduce slightly.”

In a separate analysis, AutoIMS said in its AutoIMS Industry View for the first quarter (which is a “compendium of metrics featured in the AutoIMS Sales Scorecard that reflects the AutoIMS database (with a few needed exclusions) — a vast majority of the commercial sales volume at wholesale auto auctions in North America that the average model year of vehicles sold at auction in the first quarter was 2015.3. 

That’s up from 2015.0 in the first quarter of 2021. So while a year has passed, the average model-year of vehicles sold has only gotten 0.3 years younger. 

 

 



Source : AutoFinanceNews