New travel and ownership statistics shed light on the state of the American car industry.
American drivers are travelling less, keeping their cars for longer and when their cars retire they are older, according to recently published data by the Federal Highway Administration. This data also points out at the irregularities in the American auto industry and commerce, all of which emanates from the recession and the fragile and uncertain economy. Last year Americans drove 'only' 2.963 trillion miles, 35.7 billion miles less than in the year prior, a decline of 1.2 percent according to the report.
The decline was sharper on highways by 1.6 percent, but more moderate on rural roads, with only a 1 percent decline in miles travelled. This was the lowest total annual mileage on American roads since 2003 and it's attributed to the economic climate and the high gasoline prices, which averaged last year at $3.52 a gallon, up $0.38 from a year ago. The lower mileage travelled is also reflected in other statistics. In a recent Polk research paper it was found that the average length of vehicle ownership was 71 months (almost six years), an all-time high. Ownership length of used vehicles also set a record at 50 months.
Polk points out several factors that contribute to that phenomenon such as credit restrictions, a continued weak job market, and high unemployment rates. As a result many consumers have financed their vehicles for longer time periods in order to create less expensive monthly payments, leading to longer ownership cycles. Additionally, research by various automotive agencies points to increased durability for cars and trucks sold in the U.S. Lastly, Hyundai and other OEMs have offered generous warranty periods, which make it less risky for Americans to retain older cars and trucks.
In a previous research paper Polk analysts found out that the average age of vehicles in America peaked last year to 10.8 years on average, with 11.1 years for cars and 10.4 years for trucks. A car's age in the US has been rising for the last 12 years, since 1999, when the average vehicle age was 8.8 years old (9.1 year for a car and 8.5 years for a truck). In 1995, a car's average age was 8.4 years. The implications of those numbers are declining new car sales and more employment to garage owners and their employees.
However in the last few months it seems as if the trend has changed and new car sales are once again on the rise. That is going to help the Detroit automakers, the American economy, and Obama's re-election campaign. However, a return to the boom era of a decade ago is still some way off.