The average age of a car in the US has continued a five year climb to a new record – just over 12 years old, according to S&P Global Mobility.
The biggest culprit is believed to be the supply chain issues, which have made everything from semiconductor chips to wire harnesses scarce, and limited the manufacture of new cars. The report warned, this was not going to get better any time soon, saying, “The average age of light vehicles in operation (VIO) in the US will continue to have upward pressure through 2022 and 2023, as the pipeline for new vehicle production and sales continues to be weighed down by parts shortages,”
Without new cars on dealer’s lots, customers either waited to upgrade their cars, or purchased used cars. This caused the prices of used cars to surge 40.5% on average compared to last year. That was a rate even faster than the rate of inflation, itself already at record-high levels, and only reinforced the Fed’s recent decision to raise interest rates.
With inflation wiping out any pay raises, scarcity raising the price of cars, and gas prices further eroding savings, buyers lacked the cash they would have normally spent on down payments or monthly payments.
The report also found that there were 40% more EVs on the road on 2021, and average age of those EVs was only 3.8 years old, slightly less than the previous year. Among EVs, light trucks were the fastest growing segment, up 141%, and comprising 50% of new registrations.
Todd Campau, associate director of aftermarket solutions at S&P Global Mobility said, “Behavior in the BEV market similar to the overall market: customers like truck and utility body styles; and manufacturers have reacted to position their portfolios to meet that preference.”
As car ages increased, scrappage, cars removed from the road for good, diminished. The number of cars scrapped for good in 2021 was down to 11 million from 15 million in 2020. additionally, junked cars as a percentage of all vehicles in operation fell to 4.2%, from 5.6% the year before, and the lowest in two decades.
