On June 30,
2014 Forbes magazine published an article written by Jim Henry titled “Average
Car on the Road Still Getting Older, But for the right reasons”
The age of
the average car on the road has finally hit a plateau. That is good news for
the auto industry, because it implies people are finally starting to replace their
cars and trucks instead of hanging onto them.
For the last
few years the age of the U.S. so called “fleet” kept hitting new records, with
the average car passing 10 years old, then 11 years old at an extraordinary
pace even though new vehicle sales had begin to recover. That’s partly because
new car production dropped so low before, during and immediately after the
Great Recession. With millions fewer new cars on the road, naturally that drove
the average age up.
The other
factor was that consumer confidence was so low and employment so apparently
shaky that even consumers who could afford it and who had access to credit didn’t
want to invest in a new car unless they absolutely had to replace one that
broke beyond repair.
Many of
those that did buy bought a used car instead of a new one. And many consumers couldn’t afford it, and
didn’t have easy access to credit, especially if they had subprime credit.
Accordingly,
the age of the average vehicle on American roads hit 11.4 years earlier this
year, according to an HIS automobile study based on Polk Co. registration data.
What is new is that analysts expect the average age to stay there through 2015,
and then very gradually increase to an estimated 11.7 years in 2019.
If the run
up to 11.4 years through the end of 2013 was out of necessity, analysts
attribute the gradual increase for the next five years to the fact that today’s
cars are built with higher quality and last longer.
Meanwhile,
the Power Information Network reported based on dealership transaction data
that the average trade in for the first quarter of 2014 was 6.5 years old. That
marked a small increase from the same quarter a year ago, at 6.4 years, but it
came after two quarters in a row of zero years over year increase, in the third
and fourth quarters of 2013. That’s another way of saying new vehicles and
newer used cars are moving again.
Sources
Average Car On The Road Still Getting Older But For The Right Reasons
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