Here’s Why The Average Vehicle On The Road Is Older Than Ever

Here’s another fine mess COVID-19 has gotten us into: The average age of the nation’s fleet of cars, SUVs, and light-duty trucks has risen to a decidedly senior 12.1 years over the past 12 months, according to a just released IHS Markit report. It’s up from 11.9 years last year and 9.6 years in 2002, the first year the market research firm started tracking vehicle age. 

New vehicle sales were already beginning to slide before the Coronavirus emerged last year and they crashed when factory shutdowns and shelter-in-place orders were enacted. Dealers were able to salvage some sales via digital commerce and contact-free delivery, and the business eventually rallied, with 8 million new vehicles registered in the second half of the year, according to IHS Markit.

Unfortunately, dealer inventories have been dwindling, drastically in some cases, caused by pent-up consumer demand that’s being confounded by the current shortage of microprocessor chips that is halting or slowing production of many popular car lines, including the industry’s top seller, the Ford F-150 pickup truck.

New-vehicle inventories are down by an estimated 36 percent compared to a year ago, according to Edmunds.com. Even exotic automaker Lamborghini, whose cheapest sports car is priced on a par with real estate, reports that it’s nearly sold out for the current model year. Dwindling new-vehicles on dealers’ lots and rising transaction prices are forcing many car shoppers—even rental fleets—into the pre-owned market, which is now seeing its own supply and demand issues. As a result, used-car prices have risen by a whopping average 18 percent over the last year, according to Kelley Blue Book.

What’s more, the report noted that vehicle scrappage— the measure of vehicles exiting the active population—jumped to its highest number recorded last year in the last two decades years at over 15 million units. And that’s despite the number of miles traveled by motorists dropping by over 13 percent in 2020. IHS Markit’s report suggests that the scrappage hike may be inflated due to a larger percentage of vehicles that may not have been registered due to lags in state requirements for registration renewals, and more vehicles being put into ‘storage’ due to COVID-19 business restrictions and work from home policies.

“The microchip shortage and subsequent inventory levels for new vehicles have created a situation in which used vehicle values have gotten 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,” says Todd Campau, associate director of Aftermarket Solutions at IHS Markit. 

If there is a positive aspect to the situation, Campau sees it in the aftermarket parts and repair industries. “This is great news for the aftermarket as subsequent vehicle owners typically have a higher propensity to use independent repair shops for necessary maintenance and repair,” he says.

Though supply and demand issues are certain to equalize at some point, don’t expect the average rides on the road to get any younger in the years ahead. New-vehicle affordability will likely continue to force many motorists to hold onto their present cars, trucks, and SUVs for extended ownership periods. What’s more, IHS Markit notes the expected rise of electric vehicles in the coming years could become a factor. 

The report notes that the average electric vehicle in the U.S. is 3.9 years old, with 89 percent of 2016-2020 model year EVs still registered by their first owners, as compared to 68 percent of internal combustion vehicles. As EV’s begin to gain market share and become more prominent in the used vehicle market, the research firm predicts that their average age will begin to approach conventionally powered models.