U.S. motorists are holding onto their vehicles longer than ever, according to a new study, and the COVID-19 pandemic is getting much of the blame.
The typical car, truck and crossover is now a record 11.9 years old, reports IHS Markit, a month older than they were in 2019. The difference might seem slight but, with an estimated 287 million vehicles registered in the U.S., that translates into substantial lost business for the auto industry.
With the U.S. auto market already slowing slightly going into 2020, a modest increase in the age of the average vehicle wouldn’t have been surprising, “However, the COVID-19 pandemic has created the perfect storm to accelerate U.S. light vehicle average age (even more) in coming years,” said Todd Campau, an IHS associate director.
IHS is by no means the first to identify the trend towards aging the automotive fleet, but the study shows just how quickly the coronavirus is changing things.
In terms of new vehicle sales, the industry was expected to see the numbers slip to around 16.8 million this year, down from 17.1 million in 2019, according to most forecasts. Instead, 2020 is widely expected to slip to between 13 million and 14 million – and possibly less if there’s a significant second wave to the pandemic, as now seems increasingly likely.
The possibility of new lockdowns to halt the spread of the disease is one factor. But the surge in unemployment and the broader hit to the economy are likely to have an even more significant factor. Studies show many buyers, worried about their future, holding off on high-ticket purchases, including automobiles.
And research by IHS, J.D. Power and others has shown many customers who traditionally would have bought a new vehicle are instead opting for used – especially the certified pre-owned models that carry like-new warranties.
“Given the latest IHS Markit forecasts for the further slowdown in light of COVID-19, US new vehicle sales in 2020 are expected to account for 5% or less of all vehicles on the road in 2020,” the research firm noted in a summary of its new study.
By comparison, new vehicles accounted for 6.7% of the vehicles on the road as recently as 2016, and 6.1% last year. “Declining new vehicle share in the overall population means fewer younger vehicles to temper average age growth.”
All told, there are about 287 million vehicles registered in the U.S. right now, up 1% from 2019. And fewer of them appear headed to the junkyard anytime soon, the scrappage rate steadily declining.
Automakers also have to take some of the blame. They’re simply making higher quality vehicles that last longer and longer, according to industry research.
Though breakdowns are far less frequent than even a decade or two ago, however, used vehicles still need service and repairs, noted IHS’s Campau. So, the fact that cars are lasting longer and longer on the road “should be a positive side effect for the aftermarket, as the majority of repairs for older vehicles come through the aftermarket channel.”
Don’t be surprised to see the average vehicle age grow even older, said IHS, again due to the coronavirus. With tens of millions of Americans working from home – some indefinitely – their vehicles are clocking far fewer miles than they would in normal times. And so, with less wear-and-tear, on top of the economic concerns raised by the pandemic, many U.S. motorists are expected to continue pushing back on trading in.