According to a recent analysis by S&P Global Mobility, the average age of cars and light trucks in the United States has reached a new record of 12.5 years, up by over three months from the previous year. With more than 284 million vehicles in operation on US roads, this upward trend reflects the firm’s prediction that constrained new vehicle sales would continue to impact the average age. Furthermore, the rise in light trucks and utilities has resulted in the number of passenger cars dropping below 100 million for the first time since 1978.
Continued Increase in Average Vehicle Age Reflects Sixth Consecutive Year of Growth
This year marks the sixth consecutive year of increase in the average age of vehicles in the US fleet. The rate of growth is the highest seen since the 2008-2009 recession, which accelerated the average age due to a decline in new-vehicle sales demand.
Factors Impacting Average Age Growth in 2022
The average age experienced upward pressure in 2022 due to supply constraints that resulted in low levels of new vehicle inventory. Additionally, slowing demand, influenced by interest rates and inflation, contributed to the increase in average age. These combined factors led to an 8-percent drop in retail and fleet sales of new light vehicles, reaching the lowest level in over a decade.
“We expected the confluence of factors impacting the fleet coming out of 2021 would provide further upward pressure on average vehicle age. But the pressure was amplified in the back half of 2022 as interest rates and inflation began to take their toll,” said Todd Campau, associate director of aftermarket solutions for S&P Global Mobility.
Projected Increase in New Vehicle Sales
Despite economic challenges, new vehicle sales are projected to exceed 14.5 million units in 2023, according to forecasts by S&P Global Mobility. This increase is expected to moderate the growth rate of the average age in the coming year. Campau states, “While pressure will remain on average age in 2023, we expect the curve to begin to flatten this year as we look toward returning to historical norms for new vehicle sales in 2024.”
Favorable Outlook for the Aftermarket Sector
The growing average age of light vehicles benefits the vehicle service industry, as older vehicles require repair and maintenance work. Typically, the aftermarket sector follows the growth in average vehicle age, with consumers investing more in keeping their aging vehicles in working order.
Based on the most recent S&P Global Channel Forecast, conducted jointly with the Auto Care Association and MEMA Aftermarket Suppliers, revenues of the US light duty aftermarket reached $356.5 billion in 2022, representing an increase of over 8.5-percent compared to the previous year. Early indications for 2023 suggest a potential revenue increase of 5-percent or more, prior to adjustments for inflation and other factors. The latest Channel Forecast, to be published in June, will provide further insights.
According to S&P Global Mobility, the number of vehicles aged 6-14 years is expected to grow by an additional 10 million units by 2028, adding to the already favorable volume of vehicles within the aftermarket target range.
“Traditionally, the ‘sweet spot’ for aftermarket repair was considered 6-11 years of age, but with average age at 12.5 years, the sweet spot for aftermarket repair is growing,” said Campau. “There are almost 122 million vehicles in operation over 12 years old.”
By 2028, vehicles older than six years are projected to make up more than 74% of the vehicle fleet, creating a significant opportunity for the independent aftermarket.
Shift Towards Light Trucks in the New Vehicle Market
The new vehicle market in the United States is increasingly skewed in favor of light trucks. In 2022, 78-percent of all new vehicles registered in the US were classified as light trucks or utilities. This trend reflects the continuous growth of the sport-utility segment, leading to a shift in the vehicle in operation (VIO) composition. Currently, light trucks and utilities account for nearly 63-percent of the total population.
The strong consumer preference for light trucks over cars presents a significant business potential for the vehicle service industry. Light trucks and utilities generally require higher maintenance costs compared to cars, and people tend to keep them for longer periods. According to our analysis, within the next 18-24 months, the total volume of passenger cars, including sedans, coupes, wagons, and hatchbacks, on US roads could drop below 100 million for the first time since 1978. By 2028, we expect at least 70-percent of the vehicle in operation in the US to be light trucks or utilities.
Average Age of Battery Electric Vehicles (BEVs)
The average age of battery electric vehicles (BEVs) in the US is currently 3.6 years, a slight decrease from 3.7 years in the previous year. Since 2017, the average age has remained within the range of 3 to 4 years, largely due to the continuous growth in new BEV registrations. In 2022, new BEV registrations experienced a significant 58-percent year-over-year increase, reaching nearly 758,000 units.
However, the average age of BEVs faces pressure as these vehicles leave the fleet at a faster pace compared to internal combustion engine (ICE) and diesel counterparts.
According to our analysis, out of the nearly 2.3 million BEVs registered in the US from 2013 to 2022, approximately 2.12 million are still on the road today, indicating that around 6.6-percent have left the fleet. On the other hand, excluding BEVs, out of the approximately 158 million vehicles sold in the same timeframe, there are approximately 149.8 million vehicles currently on the road, reflecting a 5.2-percent decrease in fleet departure over the time horizon.
See Also — IIHS Finds Back Seat Passenger Safety Lacking in Most Midsize SUVs
Photos copyright Stumpwater Media Group, LLC. All rights reserved.
