The average age of cars and other light vehicles on the road in the United States has been slowly rising in recent years and has continued to rise throughout 2020 amid the COVID-19 pandemic, according to a recent study conducted by IHS Markit.
The firm found that the average age of cars and trucks in operation in the U.S. has risen to 11.9 years this year, or about one month older than in 2019. This trend can be chalked up to several different factors, including rising new vehicle prices, though it has been somewhat exacerbated by the COVID-19 pandemic.
“Underlying weakness in several segments of the market, combined with increased vehicle prices, provided upwards pressure on average age of vehicles, as consumers weigh their cyclical goods expenditure, opt for longer-term financing options or hold onto their vehicles for a longer period of time,” IHS Markit said.
Before the pandemic hit, new vehicles represented just 6.1 percent of all vehicles in operation in 2019 – down from 6.7 percent in 2016, which was the previous record-setting year. Analysts predict further troubles for the automotive industry in the coming months due to the COVID-19 pandemic, with new vehicles expected to account for less than 5 percent of all registered cars, trucks and SUVs on the road this year.
The COVID-19 pandemic has people driving less as many are working from home, have not returned to work yet or have been let go from their place of employment entirely. Additionally, many are not driving to attend leisure activities (ie. going to restaurants, the gym etc.) or visiting friends and family as often. It’s hard to say how long these practices will last and what type of impact they will have on new vehicle sales going forward, but it seems the effects are already being felt.
Additionally, IHS Markit says the U.S. vehicle population is expected to surpass 280 million vehicles this year, up 1 percent from 2019. With so many older vehicles on the roads and the average of cars rising, the research firm believes there will be major opportunities within the aftermarket sector and for smaller mechanics shops to grow their business.
“Based on the analysis, the volume of vehicles 6 to 11 years old is expected to expand, which presents major opportunities for the sector due to dealer service plans and warranties expiring, netting new business opportunities for independent service and repair shops,” IHS Markit added.