According to a research released Monday by S&P Global Mobility, the average age of light cars in use in the United States has increased for the fifth year in a row.
According to the study, the average age grew to 12.2 years in 2022, up over 2% from the average life of little over 12 years in 2021.
The surge was attributed to a global microprocessor shortage and supply chain challenges, which resulted in a "limited supply of new vehicles and light trucks, amid a robust demand for personal transportation," according to S&P Global.
"People still value their automobiles; people still feel the need to have a vehicle available to them, perhaps even more so in the aftermath of the epidemic, so the vehicle fleet has merely grown a little bit," Campau said. "And because new-vehicle sales haven't been accessible, it's been expanding from within, primarily from vehicles that have already been on the road and are just remaining available longer."
According to the study, the average age of vehicles has been rising since 2011, indicating a trend toward older, higher-mileage automobiles. According to a Cox Automotive research, high-mileage car sales increased by 7% in the first quarter of 2022. Vehicles with more over 150,000 kilometers were previously considered unfit for retail sale and were instead auctioned off to independent dealers.
According to S&P Global, the US vehicle fleet — which includes all light automobiles and trucks — will grow by 3.5 million
vehicles to 283 million in 2022.
According to the statement, the increase in vehicle age is due to a continuous drop in car scrappage and a shift in demand for older automobiles. According to the report, vehicle miles restored to pre-pandemic levels in 2021, "rising by more than 10% as lockdowns relaxed and people returned to work and leisure travel," with each light car averaging 12,300 miles.
However, compared to last year, the average life of electric vehicles has decreased. According to S&P Global, the total number of battery-electric vehicles in use climbed about 40% to 1.44 million in 2022, with an average age of 3.8 years, down from 3.9 years in 2021.
"It's because the share of new EVs sold each year is such a significant share of the whole [EV] population right now," Campau explained.
In the report, S&P Global anticipated that supply and microchip limitations will continue to raise the average age of light vehicles until at least 2023.
"I believe there will be increased pressure on average age through 2024, maybe even 2025," Campau predicted. "Then, once new-vehicle supply begins to catch up with demand, I believe it will level off. There's even a chance, I believe, that when the pent-up demand for new automobiles is unleashed, we might see average age drop slightly."
What we think
As the chip shortage continues, we expect to see the same conditions presenting itself in the market. With new vehicles being put on hold, the lack of current inventory will continue to see a ramp in prices, and older vehicles continue to be on the road until the industry catches up with production.
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Sources:
WEYKAMP, G., 2022. Average age of U.S. light vehicles rises for fifth straight year. [online] Automotive News. Available at: <https://www.autonews.com/retail/average-age-cars-rises-fifth-straight-year> [Accessed 23 May 2022].