Americans are holding on to their cars longer

London-based IHS Markit has conducted a study that concludes the average age of light vehicles in operation in the United States has risen to 11.9 years, about one month older than in 2019. The increase may not necessarily signal a pent up supply of end-of-life vehicles (ELVs) will soon reach auto dismantlers and shredding plant operators, however.

Several factors have contributed to push U.S. average vehicle age higher, according to the analysis. While vehicle salvage rates have increased, which would normally cause the average age to drop, growth in new vehicle sales has plateaued. Thus, having fewer new vehicles added to the U.S. vehicle population has offset the potential drop in average age, according to IHS.

Underlying weaknesses in several segments of the market combined with increased vehicle prices have provided upward pressure on the average age of vehicles as some consumers hold onto their vehicles for a longer period of time.

“At the start of 2020, all signs were pointing to moderate growth of the average age of vehicles through the first half of the decade, and there was certainly growing pessimism about how long the strong economic fundamentals could last,” says Todd Campau, associate director of aftermarket solutions at IHS Markit. “However, the COVID-19 pandemic has created the perfect storm to accelerate U.S. light vehicle average age in the coming years.”

Campau says one bright spot is in the aftermarket parts sector, including increased demand for salvaged auto parts and components.

Prior to the pandemic, sales of new light vehicles (cars, pickup trucks and sport utility vehicles, or SUVs) in the U.S. were already trending downward, representing just 6.1 percent of vehicles in operation in 2019. That compares with  6.7 percent in 2016, which was a record-setting sales year.

Given the latest IHS Markit forecasts for the further slowdown in light of COVID-19, U.S. new vehicle sales in 2020 are expected to account for 5 percent or less of all vehicles on the road in 2020. Declining new vehicle share in the overall population means fewer younger vehicles to temper average age growth.

In 2019, the rate of ELVs recorded as a percent of vehicles on the road was 5.1 percent, while in record sales year 2016 it was just 4.6 percent. An interesting comparison year for 2020, according to IHS Markit, would be 2009. That year, new vehicles sold represented 4.2 percent of vehicles in operation, and the ELV rate stood at 5.2 percent, resulting in an increase in average age that year of four months.

“IHS Markit anticipates significant upward pressure on average age in 2020 and subsequent years as consumers work toward a new normal both economically and in how they use their personal vehicles in a post-COVID-19 era,” says Campau. “While work from home policies may continue for some time, there also has been increased reluctance in the use of public transit and ride-sharing, and many consumers are opting for road trips instead of air travel for summer vacations. As a result, vehicle miles traveled may not be impacted greatly in the coming years, given the increased personal use to offset everyday commuting.”

The changes are anticipated to result in an increase in average vehicle age over the coming years of perhaps of four to six months, according to the analysis. In turn, more vehicles will be pushed into the aftermarket sector’s “sweet spot,” thereby creating good business opportunities for sellers of salvaged parts—if they can take possession of ELVs.

Volumes of vehicles 12 to 15 years old are expected to decrease as an after-effect of the lower volumes sold during the 2008-2009 recession.