Americans are keeping their cars longer amid sky-high prices, rising interest rates

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Cars, trucks, SUVs, and other vehicles drive in traffic on the 405 freeway through the Sepulveda Pass in Los Angeles, California, on August 25, 2022.
Patrick T. Fallon | AFP | Getty Images

DETROIT — The average age of passenger vehicles on U.S. roadways climbed to a record this year, as car owners hold on to their vehicles longer amid low supplies of new vehicles and sky-high prices.

The average age of a light-duty vehicle on U.S. roads rose by more than three months — the highest year-over-year increase since the Great Recession in 2008-2009 — to 12.5 years as of Jan. 1, according to a new report Monday from S&P Global Mobility. That includes a 3.8% increase for passenger cars to 13.6 years and a 1.7% uptick in trucks, SUVs and crossovers to 11.8 years.

Rising vehicle ages are good news for aftermarket parts suppliers like AutoZone, O’Reilly Automotive and Advance Auto Parts. It also can benefit dealer service centers, but it doesn’t bode well for new vehicle dealers and sales.

“The aftermarket and the repair market as a whole is definitely a winner as the average age continues to grow,” said Todd Campau, associate director of aftermarket solutions for S&P Global Mobility. “The more older vehicles that are on the road, the more repairs they need.”

In total, S&P Global Mobility reports there are more than 284 million vehicles in operation on U.S. roads. That’s up slightly from 283 million last year.

S&P reports the average vehicle age last year experienced upward pressure initially due to supply constraints that caused low levels of new vehicle inventory, and then by slowing demand as rising interest rates and inflation reduced consumer demand in the second half of the year.

New and used vehicle prices have been elevated since the start of the coronavirus pandemic, as the global health crisis combined with supply chain issues caused production of new vehicles to sporadically idle. The costs and scarcity of inventory led consumers to buy more used vehicles, increasing those prices as well.

In addition, the Federal Reserve’s moves to raise interest rates 10 times since March 2022 have not assisted new vehicle sales.

Cox Automotive reports the average listed price of a used vehicle was $26,799 in April — the highest price point this year. The average transaction price for a new vehicle was $48,275 in April, up 3.7%, or $1,744, from a year earlier.

Trucks dominate

Part of the pricing increase is due to the vehicle mix, swinging away from passenger cars to utility vehicles.

The number of passenger cars on the road will fall below 100 million for the first time since 1978, according to S&P, as U.S. consumers demand larger vehicles that automakers are happily building at higher profit margins.

“Pickup trucks have stayed healthy. … They’ve stayed pretty consistent,” Campau said. “The real driver here is the crossover utility vehicle that really has displaced the passenger car for most families.”

In 2022, S&P reports 78% of all new vehicles registered in the U.S. last year were crossovers, trucks or SUVs.

EVs increasing

Battery electric vehicles, or BEVs, is another growing subsegment of new vehicles. S&P reports new BEV registrations jumped 58% year over year, to nearly 758,000 units in 2022.

Of the nearly 2.3 million BEVs registered in the U.S. from 2013 to 2022, S&P reports about 2.12 million are still on the road today. That equates to an average age of 3.6 years for active vehicles.

The increase in EVs comes as automakers spend billions of dollars to increase the number of new all-electric cars and trucks amid tightening government emissions regulations globally.

For example, President Joe Biden set a national target in 2021 for electric vehicles to represent half of all new auto sales by 2030.