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The auto industry is still struggling to produce and deliver enough new cars to meet customer demand. In the United States, and probably in many other markets around the world, this shortfall has a negative impact on the prices of new and used cars which, in turn, means people are generally buying and selling fewer cars than before. As a result, the average age of vehicles in the US continues to rise.
New research from S&P Global Mobility (formerly the automotive team at IHS Markit) reveals the average age of operating light vehicles and trucks (known as VIOs) in the country will rise to 12.2 years by 2022, up nearly two months over last year. This marks the fifth year in a row the average age of vehicles in the US has increased and this year’s results are an all-time record. The US fleet of light vehicles and light trucks rose to 283 million.
Industry specialists at S&P Global Mobility seem to have a very clear explanation for the aging US fleet. We are still experiencing the effects of supply chain constraints as a result of chip shortages, the coronavirus, the war in Ukraine and other global factors. This has led to a reduction in vehicle wastage with fewer people deciding to wait months for a new car instead of keeping their current vehicle operational.
By 2021, slightly more than 11 million vehicles were cancelled, or the lowest annual number in two decades. Interestingly, the previous year saw scrappage at a record high volume in 20 years with more than 15 million vehicles discarded.
S&P predicts that the average age of light vehicles operating in the United States will continue to increase through the remainder of 2022 and 2023. Without lights at the end of the tunnel for the microchip situation, there is no hope of shortening new vehicles. production and sales lines. Also, new vehicles are getting more sophisticated which puts more pressure on the supply of semiconductors, thus slowing the recovery process even further.
“While some new vehicle demand has been crushed, as supply chain challenges ease, some pent-up new vehicle demand is expected to materialize through the middle of the decade. At that point, scrappage rates could increase, creating a climate for the average age to be moderate or even slightly reduced,” Todd Campau, associate director of aftermarket solutions at S&P Global Mobility, predicts.
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