2010 seems like a lifetime ago. Barack Obama was a relatively young president in his first term. Taylor Swift became the youngest artist to win the Album of the Year Grammy. And the average car driving around today was purchased for the first time.
The average car on American roads is now 12.5 years old, according to a new study from S&P Global Mobility. The figure, researchers say, is three months higher than last year’s total.
Average Age Increased More Than Normal Last Year
This marks the sixth straight year in which the average car’s age increased, which happens when Americans slow their purchasing of new cars and work to keep their old cars running longer.
“It also reflects the highest yearly increase since the 2008-2009 recession, which caused acceleration in average age beyond its traditional rate due to the sharp decline in new-vehicle sales demand,” researchers say.
Fewer Able to Buy New Cars
The increasing age reflects how hard it is for Americans to buy new cars. The price of the average new car rose monthly for most of two years before finally peaking last December. Prices have now fallen every month of 2023 but remain historically high.
Americans paid $48,275 for the average new car in April – about 3.5% higher than a year ago.
High prices and high interest rates are keeping many buyers out of the car market. Automakers, aware that only high-income, strong-credit consumers can easily car shop, are building mostly expensive vehicles. The sub-$25,000 car has almost disappeared from the market.
Used Car Prices High, Too
Used cars, too, are near all-time price highs. The average used car sold for $26,799 in April. That’s 5.5% less than a year ago but still historically high.
Experts expect used car prices to remain relatively high for years. The 2008 recession means fewer older used cars are available for sale today. COVID-19-related manufacturing slowdowns mean fewer newer used cars.
Good News for Repair Shops
With many buyers squeezed out of car shopping, Americans are spending more to keep their existing cars running.
S&P notes, “An older fleet means vehicles will continue to need repair work and service to perform correctly.” Car parts giants AutoZone and O’Reilly Auto Parts have seen revenues soar nearly 40% since 2019.
“Traditionally, the ‘sweet spot’ for aftermarket repair was considered 6-11 years of age, but with average age at 12.5 years, the sweet spot for aftermarket repair is growing,” said Todd Campau, associate director of aftermarket solutions for S&P Global Mobility. “There are almost 122 million vehicles in operation over 12 years old.”
