Noticing fewer brand-new cars on your street or in the grocery store parking lot? You’re not alone.
The average age of a car on U.S. roads is now a little over 12 years, marking a new record, according to S&P Mobility, continuing a five-year climb.
Supply chain snarls – especially those involving the semiconductor chips that power all the technology in modern cars – were the biggest culprit, forcing automakers to slow or stop production and consumers who had planned to upgrade their rides to wait.
Don’t expect that to improve anytime soon, either: “The average age of light vehicles in operation (VIO) in the US will continue to have upward pressure through 2022 and 2023, as the pipeline for new vehicle production and sales continues to be weighed down by parts shortages,” the report warned.
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The lack of new cars on lots, in turn, drove customers who couldn’t wait to replace their vehicle to buy used ones, making them 40.5% more expensive than last year.
In fact, used car prices have actually risen faster than the rate of inflation, already at record-high levels, wiping out pay raises and reinforcing the Federal Reserve’s decision to begin raising borrowing rates across the economy.
Inflation and rising gas prices also ate up extra cash that might have gone for a down payment or monthly payments on a newer vehicle under normal economic conditions.
YOU READ THAT RIGHT: Used cars cost 40.5% more than they did last year
Average age of EVs is down
The S&P report also found that the number of electric vehicles on the road was up nearly 40% in 2021. The average age of those EVs was 3.8 years, down slightly from the year before.
The EV segments with the biggest growth? Light trucks (which include SUVs), which represented 50% of new registrations and grew 141%.
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“Behavior in the BEV market similar to the overall market: customers like truck and utility body styles; and manufacturers have reacted to position their portfolios to meet that preference,” said Todd Campau, associate director of aftermarket solutions at S&P Global Mobility.
Fewer cars on the scrap heap
With the average car age up, it’s not a big surprise to see that vehicle scrappage numbers dropped dramatically. Scrappage volume – the total number of cars taken off the road for good in 2021 – was down to 11 million from 15 million in 2020. The scrappage rate – the percentage of junked cars out of all vehicles in operation – fell to 4.2%, the lowest that number has been in two decades, compared with 5.6% the previous year.
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Mileage shoots back up
The S&P report also found that the number of miles driven has largely returned to pre-pandemic levels, with the average car owner putting 12,300 miles on their odometer in 2021.
Many people got away with minimum maintenance in 2020 as they worked from home, had goods delivered and avoided road trips. That will change, Campau said, so make room in your budget.
“Coupled with increasing average age, strong average vehicle miles traveled points to the potential for a notable increase in repair revenue in the coming year,” he said.