By Desiree Homer
New IHS Markit Data Says the Average Vehicle on the Road Is 12 Years Old
Americans are keeping their personal cars longer these days. In fact, the latest studies suggest the average age of vehicles on the road is almost 12 years. That’s far older than averages in decades past. Some dealers may be wondering whether or not the pandemic will have an additional impact on this behavioral trend. Consumers keep driving their cars in part because the ever-improving vehicle technology allows the cars to last longer. Others aren’t rushed to buy new because they enjoy not having a car payment. But in today’s economic state, there is a new group of consumers refusing to trade-in for a host of other reasons.
The Latest IHS Markit Data
IHS Markit has been tracking vehicle data since 2002. And back then, the average age of a car on the road was 9.6 years. Today’s analysis looks vastly different, and the group shared its report last week, suggesting today’s vehicle average age is 11.9 years. The report is based on vehicles in operation on January 1st of this year. People continue to drive their vehicles longer, for the most part, because they can.
How COVID-19 Might Affect Vehicle Ownership Timelines
Consumers may be hanging on to their old trusty rides even longer these days. Some may be hesitant to spend money on a new car with the influx of job security concerns and furloughs. Others may be working remotely on a more long-term basis now, with less need to drive. Vehicle owners may be concerned with the public health risks and opting not to do any unnecessary shopping over an extended period of time. Another factor is the shortage of new inventory right now. People may be holding off until next year on buying new cars because the stock isn’t there for 2020. Add these considerations to an already upward trending trajectory, and dealers may want to plan on people keeping their cars even longer than before.
Times Are Changing & So Are Industry Trends
It’s presumably common knowledge that cars on the road keep getting older and older. But COVID-19 has taught dealers not to necessarily rely on old trends anymore. Times are changing for methods of buying, but the pandemic is having secondary effects on consumer confidence and habits, too. “The next few [three to six] months could see some reversing trends,” warns Cox Automotive Chief Economist, Jonathon Smoke, in a recent Dealer News Today podcast. Tune in for valuable insights as Smoke talks to Dave and Andy about interpreting trends now and predicting future changes.
Americans driving their cars longer may mean there’s a segment that isn’t buying right now. But dealers can maybe try to focus on offering service and parts for them instead. Regardless of the consumer motives for hanging on to the older models, aged vehicles will need to be serviced. The latest IHS Markit study, along with valuable advice from Jonathon Smoke, only serves as a reminder that yesterday’s trends may not apply in today’s pandemic environment. And dealer owners should be prepared to adapt to any changing consumer behaviors.