Next time you’re out driving, check all your mirrors (as I hope you do anyway) chances are at least one of the cars around you is at least 16 years old. It might even be the car you’re driving.
This isn’t new, the average age of the American car has been heading north for some time now. Todd Campau, an after-market specialist with IHS Markit, which tracks vehicle registrations across the country, told CNBC there are many factors at work here that will likely lead to an even older fleet:
“In the mid-’90s, 100,000 miles was about all you would get out of a vehicle. Now, at a 100,000 miles a vehicle is just getting broken in,” said Campau.
With the economy struggling due to Covid-19, prompting companies to lay off millions of Americans, the age of vehicles in the U.S. is likely to rise. It may even climb at a faster rate, according to IHS Markit.
That’s because millions of people who used to commute to their jobs are now putting fewer miles on their cars as they work from home. As a result, their vehicles are likely to last longer. In addition, many who may been ready to buy a new car or truck are likely to continue driving their old one or trade it in for a used model, a market where sales have been surging.
“We went out and bought a lot of preowned (cars) and said if customers can’t get new, this demand is so strong they will switch to preowned,” AutoNation CEO Mike Jackson told CNBC’s “Squawk Box.” “That is exactly what happened.”
What Campau doesn’t mention is that, along with average fleet age which now sits at 11.9 years old, new car costs and loan lengths have also shot up. The average car loan is now 70 months long, and the average cost of a new car jumped up $5,000 over the last five years. Those 70-month loans don’t exactly come with rosy terms either. Even with the flood of 0 percent interest COVID-19 specials, the average APR on a new vehicle loan was 5.8 percent in March. With the world looking more uncertain than ever, I think a lot more people will hesitate to jump into such long term, expensive loans.
I’m very for this trend. Heck, the average age of just the Jalopnik fleet is far higher than 16 years. Hold on to those early ‘aughts cars for as long as you can friends. Treasure your Pontiacs and Saabs. Someday they’ll be classics taking first prize at your local Litwood.