The average age of cars and light trucks in the U.S. has risen again this year to a new record of 12.5 years, according to the latest analysis from S&P Global Mobility.
The growth is in line with the firm’s prediction from last year that constrained new vehicle sales would continue to impact and put upward pressure on the average age. In addition, the continued rise of light trucks/utilities means the number of passenger cars on the road will fall beneath 100 million for the first time since 1978.
This is the sixth straight year of increase in the average vehicle age of the U.S. fleet, according to S&P Global Mobility. It also reflects the highest yearly increase since the 2008-2009 recession, which caused acceleration in average age beyond its traditional rate due to the sharp decline in new vehicle sales demand.
In 2022, the average age experienced upward pressure initially due to supply constraints that caused low levels of new vehicle inventory, and then by slowing demand as interest rates and inflation reduced consumer demand in the second half of the year. The combined effect caused retail and fleet sales of new light vehicles in the US to drop 8% from 2021’s 14.6 million units to 13.9 million units in 2022, the lowest level recorded in over a decade, S&P Global Mobility says.
“We expected the confluence of factors impacting the fleet coming out of 2021 would provide further upward pressure on average vehicle age. But the pressure was amplified in the back half of 2022 as interest rates and inflation began to take their toll,” said Todd Campau, associate director of aftermarket solutions for S&P Global Mobility.
New vehicle sales are projected to surpass 14.5 million units in 2023, according to S&P Global Mobility forecasts, which is expected to curb the rate of average age growth in the coming year.
“While pressure will remain on average age in 2023, we expect the curve to begin to flatten this year as we look toward returning to historical norms for new vehicle sales in 2024,” Campau said.
Favorable business pipeline for the aftermarket
The increased pace of growth of the average light vehicle age benefits the vehicle service industry. An older fleet means vehicles will continue to need repair work and service to perform correctly.
The aftermarket sector trajectory typically follows growth in average vehicle age, as consumers invest more to keep their aging vehicles running, barring some exceptions, according to S&P Global Mobility. As a result, the most recent S&P Global Channel Forecast conducted jointly with Auto Care Association and MEMA Aftermarket Suppliers, estimates revenues of the U.S. light-duty aftermarket in 2022 have grown to $356.5 billion, up more than 8.5% over 2021, For this year, early indications from the same forecast estimate a potential revenue increase in 2023 of 5% or more, prior to adjustments for inflation and other factors. The newest Channel Forecast is set to be published in June.
S&P Global Mobility predicts that the volumes of vehicles ages 6-14 will grow by another 10 million units by 2028, adding to an already favorable volume of vehicles in the aftermarket target range.
“Traditionally, the ‘sweet spot’ for aftermarket repair was considered 6-11 years of age, but with average age at 12.5 years, the sweet spot for aftermarket repair is growing,” Campau said. “There are almost 122 million vehicles in operation over 12 years old.”