The average age of light vehicles on the road (VIO) in the United States has risen to 12.2 years this year, up nearly two months from the previous year, according to new research from S&P Global Mobility (formerly the IHS Markit automotive team).
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This is the fifth consecutive year that the average age of vehicles in the United States has increased. This year’s average age marks another all-time high for the average age, even though the vehicle fleet has recovered, increasing by 3.5 million units over the past year.
The global shortage of microchips, combined with challenges associated with the supply chain and inventory, are the main factors pushing the average age of vehicles in the United States to increase, according to the analysis. Chip supply constraints have led to continued parts shortages for automakers, which have been forced to cut production. The limited supply of new cars and light trucks, amid strong demand for personal transportation, may have encouraged consumers to continue using their existing vehicles longer, as inventory levels of new and used vehicles have burned out across the industry.
Supply chain challenges continue to transform the vehicle fleet
The continued effect of supply chain constraints has resulted in a decrease in vehicle scrap, which measures the number of vehicles leaving the fleet and has been a catalyst for the increase in average age over time . The scrapping volume for the previous year was over 11 million and the scrapping rate as a percentage of vehicles on the road was only 4.2% of vehicles on the road (VIO ) – the lowest annual rate in the last two decades. This was in stark contrast to the previous year, which saw scrapping at its highest volume in two decades at over 15 million units, and the second highest scrap rate at 5, 6% of VIO.
Additionally, the pandemic has pushed consumers from public transport and shared mobility to personal mobility and, as vehicle owners could not upgrade their existing vehicles due to bottlenecks in the supply of new vehicles, the demand for used cars has accelerated, further increasing the average age of vehicles.
Interestingly, the vehicle fleet grew significantly despite weak new vehicle sales as units that left the fleet during the pandemic returned and the existing fleet held up better than expected.
Ultimately, more vehicles taken off the road during the pandemic are returning to the fleet and rising residual values mean growing business potential for the aftermarket segment.
Vehicle miles traveled have also returned to pre-pandemic levels, increasing by more than 10% in 2021 as lockdowns ease and people return to work and leisure travel. According to S&P Global Mobility Analysis, light vehicles in the United States averaged more than 12,300 miles in 2021 and are expected to achieve a similar result in 2022. A notable increase in repair revenue over the coming year says Todd Campau, associate director of alternatives at S&P Global Mobility.
Ongoing Supply Chain Constraints Will Raise Average Age in 2022
The average age of light-duty vehicles in circulation (VIO) in the United States will continue to exert upward pressure through 2022 and 2023, as the new vehicle production and sales pipeline continues to be weighed down by parts shortages. The increasing use of sophisticated technologies in vehicles will also keep pressure on semiconductor supply. The ongoing crisis between Russia and Ukraine remains a potential impact on the new vehicle supply chain in the coming year.
The lack of sufficient supply of new vehicles to meet growing demand will continue to set the upper limit for scrap rates, which will continue to put upward pressure on the average age. “While some of the demand for new vehicles has been destroyed, as supply chain challenges ease, some pent-up demand for new vehicles is expected to be realized mid-decade. At this time There, scrapping rates could increase, creating the climate for the average age to moderate or even decrease slightly,” Campau said.
BEV growth under VIO
Demand for battery electric vehicles (BEVs) in the United States has grown rapidly in recent years, with new registrations increasing even during the pandemic. This brought the total number of BEVs in service to 1.44 million units (0.51% of global VIO), up nearly 40% from the previous year, according to S&P Global analysis. Mobility. The average age of electric vehicles in the United States is 3.8 years this year, down from 3.9 last year, and has been hovering between 3 and 4.1 years since 2016.
Interestingly, BEV registration growth is driven by light trucks (including SUVs), as is also the case for the automotive sector as a whole. Light trucks now account for more than 50% of new BEV registrations, up 141% from 2021. Electric car registrations are up 50% over the same period. The growing preference for light-duty electric trucks does not translate directly into a significant increase in the total number of BEV owners, but to date it replaces the demand for battery-electric sedan body styles, and as more and more more BEV models that better match lifestyle choices are available, the market is poised to see stronger organic growth across BEVs.
“BEV market behavior similar to overall market – customers like truck and utility body styles; and manufacturers have responded to position their portfolios to meet this preference,” Campau said. “Interestingly, this is not the only similarity with the overall market. BEV miles driven in recent years also tend to be closer to the norm, with an average of about twelve thousand miles per year for BEVs, which is only a few hundred miles below the population average. total.
As the volume of BEVs increases, this means that their average age will begin to increase, leading to increased repair possibilities for BEVs over time.