The news is even worse for EVs.
A new report from S&P Global Mobility shows the average age of light vehicles registered in the US has hit a new record high of 12.5 years. At the same time, the number of passenger cars in the US reached its lowest point since 1978. While those who are anti-car might be celebrating this revelation, ultimately these are bad signs not only for your average American but also for the American economic engine.
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Curiously, S&P Global also found the average age of a battery-electric vehicles in the US decreased slightly from 3.7 years to 3.6 years. This comes despite a surge in new sales, indicating these electric vehicles aren’t staying on the road for as long as some might believe, fueling claims that EVs are in fact disposable transportation.
With the crunch on the car market that came with all the weird covid policies, there’s been a lasting effect on vehicle prices and new car production numbers. Anyone who’s even casually looked at used or new vehicles knows exactly how inflated prices have become. Thankfully, they’re coming down, but the result is people are holding onto their cars longer as other necessities also soar in cost.
This news is great for the aftermarket since demand for parts and vehicle servicing are both way up. But as we’ve highlighted before, even as automakers are rolling out more cars than during the lean production times of the past three years, they’re also pulling back in preparation for rough economic times ahead.
High interest rates have only poured fuel on the fire. Plenty of Americans are simply priced out of the new vehicle market and can’t afford a quality used option, forcing them to make the best of what they have. For some families, that means scaling from two cars to one.
What might surprise a lot of people is that S&P Global says this trend of an increasing average vehicle age in the US started six years ago, which was well before covid. While the pandemic certainly compounded things, other factors are helping to drive this phenomenon.
S&P Global notes the latest annual increase in average vehicle age is the highest since the recession of 2008-2009. This could be yet another indicator all isn’t well with the economy.
Everything isn’t doom and gloom. S&P Global is projecting the average vehicle age growth rate will decrease for 2023 thanks to robust new car sales. What’s more, light trucks have been far and away the most popular choice among consumers, a trend that’s been going on for years and is projected to keep increasing for years to come. That should be music to automakers’ ears.
S&P Global is also projecting new vehicle sales in 2024 will return to normal rates, a big positive for people looking to wait out the weirdness in the market.
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