Cars on roads in the United States are the oldest they’ve ever been, a report found.
Research and analysis company IHS Markit found the average age of cars and light trucks reached 12.1 years in 2021 — the highest average age reported since at least 2002, the earliest year for which data is available. That’s an increase of nearly 2 months since 2020.
The report suggests that the coronavirus pandemic played a major role in driving up the average light vehicle age as it spurred shortages that have also led to an increase in used car prices. But, it says, the “rate of increase in average age” isn’t expected to last long.
How COVID led to the age increase
The coronavirus pandemic caused a “drastic reduction in new vehicle sales” and an increase in “vehicle scrappage” — or vehicles leaving the “active population” — which IHS Markit says was a “catalyst” for the increase in the average light vehicle age.
“Typically, an increase in scrappage rate would be expected to be a headwind to average age, but coupled with the lower new vehicle sales and reduced vehicle miles traveled, the combined impact proved to be a tailwind,” the report says.
Vehicle miles traveled also fell by more than 13% in 2020 as many Americans were staying home due to COVID-19 restrictions or from working at home, the report say.
The report pointed out that the number of cars leaving the active population may be inflated due to eased registration renewal requirements in some states and an increase in vehicles being put in storage.
A ‘short-lived’ increase
Computer microchips and other supplies needed to manufacture vehicles have been in short supply over the past year, putting a strain on new car supply.
Data from Cars.com in May showed new car inventory decreased by more than 15% between February and April. And as new car inventory fell, consumers turned to used vehicles — also putting a strain on that supply and driving up prices, according to Cars.com.
IHS Markit says the microchip shortage is expected to “continue to challenge new vehicle production volumes through the fourth quarter 2021.”
“But rounding out the year, IHS Markit expects U.S. light vehicle sales to reach 16.8 million according to current forecasts, which can be expected to mute average age growth,” the report says.
Additionally, the report says used vehicle sales could “shape” the average age in 2021 because of the increased value of used vehicles.
“A vehicle owner who may have kept a vehicle in the garage that they were not using in 2020, now instead may take advantage of the opportunity to either reduce the number of vehicles in their garage, or trade up to something newer while the demand and value is extremely high on their used vehicle,” Todd Campau, associate director of Aftermarket Solutions at IHS Markit, said in the report.
IHS Markit’s website says it “is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide.”