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The average age of light vehicles in operation (VIO) in the US has once again climbed slightly this year, to 11.6 years, according to industry experts at IHS Markit, a provider of business information and analysis for the global automotive industry.
Registrations for light VIO, including cars and light trucks (SUVs/CUVs as well) in the US also reached a record level of more than 264-million — an increase of more than 6,2-million (2,4%) since last year. This represents the highest annual increase the auto industry has seen in the US since it began tracking VIO growth – breaking the record of 2,1% growth set in 2015.
“Quality of new vehicles continues to be a key driver of the rising average vehicle age over time,” says Mark Seng, director: global automotive aftermarket practice at IHS Markit. “The recession created an acceleration beyond its traditional rate due to the nearly 40 percent drop in new vehicle sales in 2008-2009. In the last couple of years, however, average age is returning to a more traditional rate of increase.”
Adding vehicles to the fleet on the road is also a coup for the automotive aftermarket industry – those in components manufacturing, repair and service.
“Increasing numbers of vehicles on the road builds a new business pipeline for the aftermarket,” Seng said. “A larger fleet means more vehicles that will need repair work and service in the future.”
According to IHS Markit, consumers are continuing the trend of holding onto their vehicles longer than ever. As of the end of 2015, the average length of ownership measured a record 79,3 months, more than 1,5 months longer than reported in the previous year. For used vehicles, it is nearly 66 months. Both are significantly longer lengths of ownership since the same measure a decade ago.
When it comes to vehicles being scrapped, those taken out of services during 2015 remained relatively flat compared to 2014, with just over 11-million light vehicles retired out of the fleet, representing about 4,3% of the overall population. This figure is significantly less than the record high of more than 14-million vehicles that were scrapped in 2012.
The average age growth of the vehicle fleet will bring new opportunity for the automotive aftermarket, the analysis says. The 40% drop in new light vehicle registrations experienced during the downturn in 2008-10 is something that will be felt by those businesses involved in the aftermarket for years to come due to its significant impact on the various age segments of the overall fleet. This measure is closely monitored, as it is important to business planners in the aftermarket and service industries – the people who manage inventories of parts required and plan for sales and service activity accordingly.
According to IHS Markit, the shifting dynamic of the age of vehicles in operation indicates the volumes of vehicles in the new to five years-old category will grow 16% by 2021, while vehicles in the six to 11 year-old range will grow just 5%, and vehicles that are 12+ years old will grow 10%.
The oldest vehicles on the road are growing the fastest – with vehicles 16 years and older expected to grow 30% from 62-million units today to 81-million units in 2021. IHS Markit research also indicates more than 20-million vehicles on the road in 2021 will be more than 25 years old.
Businesses in the automotive aftermarket are working to adjust to the change in the market, and planning opportunities are underway to address the changing landscape. Also, vehicle manufacturers and dealers are working to identify additional new vehicle sales opportunities as new models are replacing those leaving the fleet.