Average vehicle age hits record high

SOUTHFIELD, Mich. — The average age of cars and light trucks in the U.S. has risen again this year to a record of 12.5 years, up by more than three months over 2022, according to the latest analysis from S&P Global Mobility.

With more than 284 million vehicles in operation (VIO) in the U.S., the increase in the average age 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, S&P Global said.

In addition, the continued popularity of light trucks/SUVs has impacted the number of passenger cars on the road, which fell below 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. It also reflects the highest yearly increase since the 2008-09 recession, which caused acceleration in average age beyond its traditional rate due to the sharp decline in new-vehicle sales demand, the company said.

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, S&P Global said.

The combined effect caused retail and fleet sales of new light vehicles in the U.S. to drop 8% to 13.9 million units in 2022 from 14.6 million in 2021,the lowest level recorded in over a decade.

"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," Todd Campau, associate director of aftermarket solutions for S&P Global Mobility, said.

Despite economic headwinds, 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.

The increased pace of growth of the average light vehicle age benefits the vehicle service industry, he noted, as an older fleet means vehicles will continue to need repair work and service.

The aftermarket sector trajectory typically follows growth in average vehicle age, as consumers invest more to keep their aging vehicles running, barring some exceptions.

The most recent S&P Global Channel Forecast, conducted jointly with the Auto Care Association and MEMA Aftermarket Suppliers, estimates revenues of the U.S. light duty aftermarket in 2022 grew 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 of 5% or more, prior to adjustments for inflation and other factors. The newest Channel Forecast is set to be published in June.

According to S&P Global Mobility, the volumes of vehicles ages six to 14 years will grow by another 10 million units by 2028, adding to an already favorable volume of vehicles in the aftermarket target range, the firm said.

"Traditionally, the 'sweet spot' for aftermarket repair was considered six to 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."

In total, vehicles older than six years will account for more than 74% of the vehicle fleet in 2028, according to S&P Global Mobility estimates. These vehicles drive the most repair opportunities and should serve as a positive trend for the independent aftermarket, the company said.

Meanwhile, light truck/sport utility vehicle growth has trended upward for several years, accounting for 78% of all new vehicles registered in the U.S. last year.

For the total VIO, light trucks/SUVs represent nearly 63% of the population.

This is also good news for the aftermarket service industry as light trucks/SUVs generally cost more to maintain than cars, and people tend to keep them longer, S&P Global noted.

The company predicts that within the next 18-24 months, the total volume of passenger cars — sedans, coupes, wagons and hatchbacks — on the road in the U.S. could drop below 100 million for the first time since 1978.

By 2028, S&P Global expects at least 70% of the VIO in the U.S. to be light trucks/SUVs.

The average age of battery electric vehicles (BEVs) in the U.S. is 3.6 years this year, down from 3.7 years last year, according to S&P Global.

The average age has been hovering between three and four years since 2017 and is largely compressed as new BEV registrations continue to grow.

According to S&P Global estimates, new BEV registrations achieved a 58% gain year-over-year, to nearly 758,000 units in 2022.

However, the average age of BEVs is under pressure as BEVs are leaving the fleet more rapidly than their ICE and diesel counterparts.

According to S&P Global analysis, of the nearly 2.3 million BEVs registered in the U.S. from 2013 to 2022, about 2.12 million are still on the road today — about 6.6% have left the fleet.

Comparatively, during the same timeframe, roughly 158 million vehicles of other fuel types were sold, with around 149.8 million such vehicles on the road today — reflecting that 5.2% left the fleet over the time period.