The Average Age of Vehicles in America: Why Americans are Holding onto Their Cars for Longer

It’s no secret that Americans love their cars. From classic muscle cars to modern electric vehicles (EVs), cars have become an integral part of American culture. However, recent reports suggest that Americans are holding onto their cars for longer periods of time. In fact, the average age of vehicles in America is now 12.5 years, marking the sixth straight year that this number has increased.

So, why are Americans holding onto their cars for longer? There are several reasons for this trend, including supply chain challenges, rising transaction prices, and changing consumer preferences. In this article, we’ll explore these factors in more detail and examine what they mean for the future of the automotive industry.

Supply Chain Challenges

One of the main reasons why Americans are holding onto their cars for longer is due to recent supply chain challenges. Chip shortages and other production headaches have made it difficult for automakers to produce new vehicles, resulting in limited inventory at dealerships. As a result, some customers have turned to the used car market to find replacement vehicles.

While this may not seem like a significant factor on its own, when multiplied by millions of transactions, it can have a significant impact on the average age of vehicles on American roads. According to S&P Global Mobility, the average light truck is slightly younger than the average passenger car when it comes to internal combustion vehicles. However, EVs are much newer on average than gasoline- or diesel-fueled machines, reflecting the growth of EV sales over the last few years.

Rising Transaction Prices

Another factor contributing to the trend of holding onto cars for longer is rising transaction prices. Average transaction prices have never been higher due to a combination of tight supply, dealer markups, and OEMs focusing on producing profitable trims. Inflation and interest rates also play a role, as many customers buy cars on payment plans. Seeing a higher interest rate on a four-square can make a significant dent in buying patterns.

Changing Consumer Preferences

Finally, changing consumer preferences are also contributing to the trend of holding onto cars for longer. As EVs become more popular, consumers are becoming more interested in owning them. The current average age of EVs in America is roughly 3.6 years, according to S&P Global Mobility. Twelve years ago, there was comparatively little selection, but today, EVs are becoming more affordable and accessible.

Looking to the Future

After six years of steady increases in the average age of vehicles on American roads, some experts predict that 2023 could be the year that this trend reverses, albeit slightly. If production ramps up and sales of new cars get back to some semblance of historic norms, a flood of fresh metal could drive down the average age of vehicles on the road in America. However, it’s worth noting that some experts made the same prediction last year, and that didn’t come to fruition.

In conclusion, Americans are holding onto their cars for longer due to supply chain challenges, rising transaction prices, and changing consumer preferences. While these factors may shift in the future, they are likely to continue shaping the automotive industry for years to come. Whether you’re a car enthusiast or a casual driver, it’s worth keeping an eye on these trends and how they may impact your driving experience.