Tue. Sep 27th, 2022


The average age of light vehicles in the US reached an
all-time high in 2022 as the vehicle fleet climbed to 283M
passenger cars and light trucks.

The average age of light vehicles in operation (VIO) in the US
rose to 12.2 years this year, increasing by nearly two months over
the prior year, according to new research from S&P Global
Mobility (formerly the automotive team at IHS Markit).

This is the fifth straight year the average vehicle age in the
US has risen. This year’s average age marks another all-time high
for the average age even as the vehicle fleet recovered, growing by
3.5 million units in the past year.

The global microchip shortage, combined with associated supply
chain and inventory challenges, are the primary factors pushing US
average vehicle age higher, according to the analysis. Chip supply
constraints have caused continued parts shortages for carmakers,
who have been forced to cut production. The constrained supply of
new cars and light trucks, amid a strong demand for personal
transportation, could have influenced consumers to continue
operating their existing vehicles longer, as inventory levels for
both new and used vehicles were depleted across the industry.

Supply chain challenges continue to transform vehicle
fleet

The ongoing effect of supply chain constraints has led to a
decrease in vehicle scrappage, which measures the number of
vehicles leaving the vehicle population and has been a catalyst for
the rise in average age over time. The scrappage volume for the
prior year stood at over 11 million and scrappage rate as a percent
of vehicles on the road was just 4.2% of the vehicles in operation
(VIO) – the lowest annual rate in the past two decades. It was in
stark contrast from the previous year, which saw scrappage at its
highest volume in two decades at over 15 million units, and second
highest scrappage rate at 5.6% of VIO.

Additionally, the pandemic drove consumers from public transport
and shared mobility to personal mobility and since vehicle owners
couldn’t upgrade their existing vehicles due to bottlenecks in the
supply of new vehicles, the demand for used cars accelerated –
boosting vehicle average age further.

Interestingly, the vehicle fleet grew substantially in spite of
soft new vehicle sales as units that left the fleet during the
pandemic returned and the existing fleet sustained better than
expected.

Ultimately, more vehicles that were taken out of circulation
during the pandemic returning to the fleet and increased residual
values mean growing business potential for the aftermarket
segment.

Vehicle miles traveled also has returned to pre-pandemic levels,
increasing by more than 10% in 2021 as lockdowns eased and people
returned to work and leisure travel. According to the S&P
Global Mobility analysis, light vehicles in the US traveled an
average of over 12,300 miles in 2021 and are expected to achieve a
similar result in 2022. “Coupled with increasing average age,
strong average vehicle miles traveled points to the potential for a
notable increase in repair revenue in the coming year,” according
to Todd Campau, associate director of aftermarket solutions at
S&P Global Mobility.

Lingering supply chain constraints to lift average age
in 2022

The average age of light vehicles in operation (VIO) in the US will
continue to have upward pressure through 2022 and 2023, as the
pipeline for new vehicle production and sales continues to be
weighed down by parts shortages. The increasing use of
sophisticated technology in vehicles will also maintain pressure on
semiconductor supply. The ongoing Russia-Ukraine crisis remains a
potential impact to the new vehicle supply chain in the coming
year.

The lack of adequate supply of new vehicles to meet the
increasing demand will continue to set the upper limit for
scrappage rates, which will continue to provide upward pressure on
average age. “While some of the new vehicle demand has been
destroyed, as supply chain challenges ease, some pent-up demand for
new vehicles is expected to be realized through the middle of the
decade. At that time, scrappage rates could increase, creating the
climate for average age to moderate or even reduce slightly,” said
Campau.

BEV Growth as part of VIO

Demand for battery electric vehicles (BEVs) in the US has been
expanding rapidly over the past few years, with new registrations
growing even through the pandemic. This has boosted total BEVs in
operation to 1.44 million units (0.51% of overall VIO), up nearly
40% from the prior year, according to S&P Global Mobility
analysis. The average age of electric vehicles in the US is 3.8
years of age this year, down from 3.9 last year, and has been
hovering between 3 and 4.1 years since 2016.

Interestingly, the growth in BEV registrations is driven by
light trucks (including SUVs), as is also true for the overall
automotive sector. Light trucks now represent over 50% of new BEV
registrations, growing 141% over 2021. Electric car registrations
grew 50% in the same period. The rising preference for light
electric trucks is not directly translating into a significant jump
in overall BEV ownership, but to date is replacing demand for
battery electric sedan body styles, and as more BEV models that
better match lifestyle choices are available, the market is poised
to see more sustained organic growth in BEVs overall

“Behavior in the BEV market similar to the overall market –
customers like truck and utility body styles; and manufacturers
have reacted to position their portfolios to meet that preference,”
said Campau. “Interestingly, it’s not the only similarity with the
overall market. BEV miles traveled in recent years also have
trended toward the norm, with BEV’s averaging about twelve thousand
miles annually, which is only a couple hundred miles lower than the
total population’s average.”

As the volume of BEVs increases, it will mean their average age
will begin to increase, resulting in increased repair opportunities
for BEVs over time.

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information

This article was written by:

  • Todd Campau, associate director of aftermarket solutions,
    S&P Global Mobility
  • Nishant Parekh, senior research analyst of aftermarket
    solutions, S&P Global Mobility



This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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