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Off to the Junkyard: Vehicle Scrappage Rates Soar

Biggest jump since Cash for Clunkers program.

by on Mar.10, 2011

Auto scrappage rates are rising fast as the nation's vehicle fleet ages.

While car sales may be on the mend, demand is still substantially below the 17-million peak the U.S. market saw a decade ago.  And a substantial number of the vehicles sold during the last industry boom are going bust, which means a big jump in business for America’s junkyards.

The number of vehicles scrapped during the fourth quarter of 2010 spiked to the highest level seen since the brief Cash for Clunkers program – which was specifically intended to get old products off the road – reports Experian Automotive, an Illinois firm that tracks vehicle sales and registration data.

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The number of passenger cars sent to scrapyards or otherwise pulled from operation rose by 28.3% during the fourth quarter compared to the previous quarter.  For SUVs, pickups and other light trucks, the increase was an astounding 58.2%.

To put things into perspective, the annual scrappage rate was 5.3% for passenger cars, last year, and 3.5% for light trucks.  The vehicles most often junked were built between 1983 and 1992.

For the second half of 2010, that translated into 5.7 million vehicles going off to the junkyard.  Another 17.5 million used vehicles changed hands, Experian reports.

That said, there are still plenty of vehicles to go around, according to Experian, which determined that as of the end of the year there were 239,811,984 cars, trucks and crossovers in use in the United States.  But the big burst in junkyard business means that number was down by nearly half a million from earlier in 2010.

With U.S. new car sales still off by about 30% from prior peaks, the average age of those vehicles rose by 3.3%, to 9.9 years during the fourth quarter of 2010.

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10 Responses to “Off to the Junkyard: Vehicle Scrappage Rates Soar”

  1. Gannon says:

    I would like to see some analysis here.

    WHEN did Detroit largely go to the 120K miles maximum with their designs?

    Remember when Jack the Knife stepped in at Ford…and what was his counterpart’s name with GM, the guy who stole that info from Opel and went to VW? (hope I got that all correct, it has been a L-O-N-G time, and I forgot all that pain)

    That second idiot was the one who cancelled ALL the supplier contracts, then told them to come back with a MINIMUM of 50% lower pricing…or he would come out to their operations and show them how to get there?!

    I remember afterwards the dealers starting getting failures of things that had NEVER failed on American automobiles, like main bearings and such which were traditionally engineered for infinite life. (yes, I over-speak, but I’m pissed about this still, to ME it was the beginning of the demise of the American car manufacturing)

    So, yeah, they MAKE cars with a deadline. Life expectantcy of 120K miles. For ME? That was always the break-in point for my Volkwagens…and my German-made 2000 Audi A4 Avant went nearly 300K miles for me before I had to get rid of it.

    I was going for 500k miles…and that with the 1.8T! (which, btw, always gave me 45mpg when I drove 55mph, the Avant was SO aerodynamic)

    NO Cheers on this one…there is a backstory on WHY we have to junk our cars now. I’m bucking the trend with my old ’95 Windstar, and will invest in rebuilding it. That first-year version rode like a Towne Car, with all its vibration and noise cancelling…and when I bought it I had them include the Factory Service manual.

    But I’m going to start recording my encounters with the service people. You wouldn’t believe the SCORN I get for continuing to own this thing! Last time I went in for parts, the dealer employee actually snorted when I said which model vehicle!

    American car dealers are NOT encouraging ANYTHING but new vehicle purchase and maintenance within warranty. An undercover reporter would have a field day…

    Sincerely,
    John

    • Paul A. Eisenstein says:

      John, I believe you’re referring to Ignaki Lopez, the Basque exec who proclaimed his intense loyalty for former GM Chairman Jack Smith — until he made a midnight move to VW.
      There was no question that Detroit makers were, to varying degrees, willing to sacrifice for lower piece costs: sacrifice performance, features, quality and, of course, consequent customer satisfaction and loyalty. This varied between makers and GM seemed most determined to beat suppliers into submission without recognizing the long-term consequences…which were severe.
      Today, makers are incredibly focused on cost, of course, but also recognize that cost-cutting, if you will, has its price. They certainly now have to drive up scores in the various JD Power, Consumer Reports and other quality charts. There’s a lot of focus on “initial” quality, but longer-term vehicle dependability surveys also get a lot of play and can’t be minimized. The longer warranties, 60,000, 80,000, even 100,000 should be commended, but I honestly can’t say whom I believe is truly focused on ensuring their products last, anymore, much past 100,000 miles or maybe 10 years. My sense is that even the Japanese and Euros are less interested in achieving this. The good news is that the changes made for short and mid-term quality should also play out longer-term.
      Paul A. Eisenstein
      Publisher, TheDetroitBureau.com

  2. Gannon says:

    Don’t get me started on Ford’s DE-CONTENTING program…which requires a certain percentage of cost savings per group per year on every model.

    I really, really hope they’ve quit that shit.

    My first-year Contour SVT was killer. EVERY year aferwards they got cheaper and crappier, to the point that I couldn’t recommend the SAME vehicle to anyone who asked.

    Sat in one a few years later at the Auto Show and thought I was going to go THROUGH the leather on the seats, they made it so thin.

    So, can you check to see if DE-contenting is still in force at Ford?! I’ve been telling people for YEARS that you can ONLY buy the first year of any Ford product…after that, it is a crapshoot on quality and feature-set.

    Again, NO cheers on this…

    • Paul A. Eisenstein says:

      John, the question of contenting is one makers always play with. But there are two ways, in my mind, to measure this:
      The first is to shift from reasonably good materials to cheaper, flimsier components. You’ve seen this in particular in Japanese vehicles, in recent years, like the Toyota Corolla. It’s in part the result of having to compensate for the strong yen. So the cabins become notably less lavishly executed. You’ve also seen this in the lower-level German luxo models and now in the VW Jetta, the U.S. version clearly engineered to deliver a price point that can compete with U.S. and Japanese alternatives. All makers feel pricing pressures but noting the various reports on Toyota’s new Global Vision, I expect this trend to accelerate there as CEO Toyoda made a clear emphasis of plans to further cut costs.
      The second measurement of de-contenting actually deals with reducing the level of features, whether eliminating seat warmers, opting for a cheaper radio, doing away with navi, etc. If anything, I think Ford seems to be moving in the other direction on some models, ie the new Fiesta. The maker wants to shift perceptions and present this as a small but reasonably well-equipped model, rather than the classic subcompact econobox. Now, often that can result in very stripped base cars and then a line-up of more lavish models or content-heavy “packages,” but I think Ford recognizes that it was hurting itself by presenting its products as stripped-down models. The flip side is that you pay for the added content and finishes. The offset is that by moving to its global One Ford strategy, sharing 80% of the content on the Euro and U.S. Focus models, for example, the company improves economies of scale, which does make it possible to offer a bit more for the same price.
      Paul A. Eisenstein
      Publisher, TheDetroitBureau.com

  3. Albert says:

    Car sales may be on the mend but much of the car driving population is leaving the road – “greatest generation” is kinda past driving age and the old end of the baby boomers are headed for the exits so to speak. Their kids get their nicer cars or sell them; in turn cars beyond maintenance should be (economically abandoned)scrapped at an accelerating rate for some time to come. If car sales return to old rates, it will be because the share of the fleet that gets repalced each year goes up. The fleet in general kinda has to shirnk with population.

    • Paul A. Eisenstein says:

      Hi, Albert,
      There is no sign the population will shrink. Quite the opposite, though there’s been an at least temporary dip in the level of immigration that was considered likely to help drive that population growth. Even then, all data say we’ll keep growing; the pace is the question. We’re also heading into a new bubble in terms of drivers coming of age as the millennials reach legal driving age.
      Now, there are some who question whether that generation is rushing out to buy cars at the pace of their Boomer (or Gen-X) parents and Silent Generation grandparents. We’re certainly seeing more of this new gen sitting things out in Europe and, especially, Japan. But considering the nature of mass transit in the States, this is more likely to simply delay driving a year or two, rather than reducing the % of drivers. And considering that in all but the most affluent communities first-time buyers go used, the impact on the new car market will be minimal.
      The trends to watch are 1) the rise in new car prices, which has led more and more to be priced out of the market; and thus 2) what happens in the used car market. Right now, there’s your bubble, and as prices for relatively “new” used cars spike that makes it more attractive to keep the junkers in operations for at least a wee bit longer.
      Paul A. Eisenstein
      Publisher, TheDetroitBureau.com

  4. GenJones says:

    There still are some makers, notably Mercedes Benz and perhaps Audi and less so Lexus, that concentrate on long term reliability. The trouble I see is specifically Consumer Union (CU) who it appears “cook the books” by concentrating on “relative reliability” instead of admitting that cars get 5% more reliable overall every year (as the JD Power stats seem to show) and that CU good “red” dots are only a small pittance different from the “best” bad “black” dots on their reliability ratings. A vehicle can get a “black” dot if they have 5 or so (I’m making a guess as to the numbers) defects per 100 cars vs. 15 or more perhaps and the type of defects can vary (electrical or mechanical, serious or not). BMW and Mercedes fare worse because they may have twice the number of gadgets in their cars that can go wrong so statistically, use more safety and state-of-the-art tech, so their cars do worse even though they may be just as reliable or even better than CU’s “best.” All this in the name of “selling copy” shows corruption of the worst kind since CU advertises how “unbiased” they are. A lot of people base their buying decisions on CU and Japanese brands have had quite an advantage over the years as a result.

    The point of all this critique is that carmakers might not concentrate on longevity but short term reliability as a result or just de-content their cars to prevent the effective smear from misguided consumerist self-promoting ratings. Carmakers like Toyota may end up producing cars that are cheaply made, bland, de-contented, and technologically “copy-cat” with no redeeming value except for a consumerist mime that says “I’m reliable” even though in reality they are less safe, just as breakdown prone (but have denial built in due to image and bragging rights so you might not hear about it) and sometimes come up with large recalls anyway.

    • Paul A. Eisenstein says:

      Hi, Peter,
      I am not so certain I’d discount the CU data, which has also had some very positive effects on the industry. Yes, there are some questionable elements, but I think we’ve seen an overall positive impact from automakers paying attention to reliability ratings. That said, they sometimes are too quick to focus on issues that will improve scores rather than truly improve their vehicles overall.
      Paul A. Eisenstein
      Publisher, TheDetroitBureau.com

  5. GenJones says:

    True, the data need to be taken for what they are. But CU doesn’t explain or give the raw data, so you get headlines about how the luxury makers are unreliable which are patent falsehoods. Those in the know can interpret the CU data but since the 1970′s, its became somewhat useless compared to its past accuracy when cars really were unreliable.

    Today’s technology and modular designs with outsourcing make it highly unlikely that reliability is even that much different from manufacturing process. Its more likely that how vehicles are driven by the demographic that buys them (s.a. well heeled upper middle class men with an extended warranty “racing” the Mercedes and then complaining about the brakes). Durability is poorly documented and controlled for in CU publications. The public deserves more scientific analysis than that, doesn’t it?

    Cheers.

  6. GenJones says:

    To answer a previous post about longevity of components, engineering is an exercise in compromise. Sure, each component can be designed to outlast the rest of the car (the body for example can fall apart but the engine might go forever if its designed and built to last – at a much higher cost) literally junking a vehicle with components that had extra costs uselessly spent. No carmaker wants to be at a disadvantage nor does a component manufacturer – everyone competes on price. Consumers will have it no other way.

    The trick is to make it so that each component is designed and manufactured to a reasonable cost that will approximate the maximum lifespan of a vehicle. If you are familiar with Mercedes, their E class is designed for each component to be “better” than their C class. This seems deliberate since the E is used for their “Taxi” buyers who are fanatical about longevity. VW Beetles on the other hand were designed originally to be modular so that parts could be replaced easily and the cars could be maintained for a long time.

    A good German mechanic can look at a car and tell how much longer it has. Many cars are thought to be built for 25 year service, at least in the past. BMW was not so high on the list in Europe – although sporty, not so reliable or solidly built (my cousin’s 7 series was notable for its interior pieces falling off!). But in the US, BMW advertised successfully so that it was the only profitable Euro import in 1988. Mercedes then “cheapened” its products to meet the challenge and developed a poor reliability reputation (in the age of Windows 95, most of the problems were in the car computers and BMW led the charge with computerized car gadgets).

    So its more of a consumer led phenom IMO. Hard to find stuff that lasts long enough without reading the tea leaves…. and engineering briefs!