Covid, computer chips and changing demands have played the biggest role in aging our collective fleet.
As used car prices skyrocket, the average age of vehicles on the road has increased to 12.1 years, according to a study from IHS Markit. Normally, such an event would make the average age decline, but with few miles traveled, and less vehicle sales last year, it had the opposite effect. That average has been rising for a few years. In 2020 the average was 11.9 years and the previous it was 11.8.
Obviously, the pandemic was a big factor here. More people were working from home, which meant less miles driven. IHS reports that between 2019 and 2020, driving miles were down 13%. There was also an increase in vehicle scrappage, meaning there were people with sitting cars that finally decided to put them up for sale. Cars exiting the market saw the highest volume in two decades at over 15 million units.
"Typically, an increase in scrappage rate would be expected to be a headwind to average age, but coupled with the lower new vehicle sales and reduced vehicle miles traveled, the combined impact proved to be a tailwind," says IHS.
The used car market also played a part. As new car sales have dried up due to the chip shortage and increased demand (especially with popular vehicles like the Ford F-150), used car prices have hit all-time highs, almost forcing people to sell. But with used car prices so high, it's also harder to buy. Honestly, we even looked up a few prices for our own cars, and one of us actually decided to sell.
"The microchip shortage and subsequent inventory levels for new vehicles have created a situation in which used vehicle values have gotten extremely high, so a vehicle owner who may have kept a vehicle in the garage that they were not using in 2020, now instead may take advantage of the opportunity to either reduce the number of vehicles in their garage, or trade up to something newer while the demand and value is extremely high on their used vehicle," said Todd Campau, associate director of aftermarket solutions at IHS Markit, in a press release.
Don't expect this trend to last. The chip shortage will continue, but IHS expects light vehicle sales to bounce back to 16.8 million units. Also, some vehicle owners have let their registrations lapse over the past 16 months, because their vehicle were not being driven.
"This is great news for the aftermarket as subsequent vehicle owners typically have a higher propensity to use independent repair shops for necessary maintenance and repair," said Campau.
The number of vehicles in operation is also down, from 281 million to 279 million. That means there is going to be growth in the aftermarket, as those older vehicles aged 6-11 years start to need repairs and upgrades.