The average age of light vehicles in operation has hit a record, increasing by two months this year to 12.2 years, as a shortage of vehicles is keeping Americans in their cars for longer, according to a study released on Monday.
It's the fifth consecutive year of increase even as the U.S. vehicle fleet recovered, growing by 3.5 million vehicles in the past year, according to the report from financial information firm S&P Global. Inc's mobility team. The results are indicative of pent-up demand that's likely to keep automakers, their dealers and repair shops happy for years to come.
Prior to the pandemic, researchers had expected the average age of vehicles to flatten because of declining sales from their more than 17 million annual peak. Interrupted production from the COVID-19 pandemic followed by a global microchip shortage and other scarce parts, however, has depleted dealership lots and sent up the price of vehicles.
"It is a little bit of a unique situation driving the growth trajectory," said Todd Campau, automotive aftermarket practice lead at S&P Global. "We expect it to continue to grow for a few years and then drop off in the '25, '26 range, depending on how the pandemic, pent-up demand and scrappage work out."
The average age of a car on the road is 13.1 years, while trucks sit at 11.6 years, according to the analysis.
Scrappage volume for 2021 was at more than 11 million vehicles, a rate of 4.2% of vehicles in operation. That was the lowest annual rate in the past two decades, a reverse from 2020 that saw the highest volume in two decades at more than 15 million vehicles, the second highest rate at 5.6%.
A return to work and other activities as well as increasing demand for rental fleets contributed to the reversal with drivers traveling more than 12,300 miles on average, a 10% increase year-over-year. Unused vehicles during lockdowns may have once again been registered, Campau said, also contributing to the increased number of vehicles in operation.
"Finding a new vehicle is extremely challenging," Campau said. "If you can wait, the situation is expected to get better in 18 months or so."
That means more drivers may be headed to the repair shop due to aging vehicles. S&P Global was forecasting an 11% increase in service and repairs in 2021 from 2020. It appears that it surpassed that, Campau said.
Of course, increasing age of American cars likely means vehicles with worse fuel economy stay on the road, costing drivers money in higher gas prices and emitting more pollution than newer models.
Automakers have said they are prioritizing vehicles with better fuel economy and higher profits margins. A 40% increase in EVs to 1.4 million vehicles in operation decreased their average age to 3.8 years from 3.9 years last year.
"What you're seeing there," Campau said, "is just how fast their sales are growing."
