Average age of our vehicles at a record high.
I remember when I was a wee lad,that one of the clear differences between European and American cars was apart from many attributes, their longevity. Cars have always been built for a longer lifespan in Europe than in the US. If you bought a car back home, you’d expect it to still be a member of the family 10 years later, but American cars would seemingly only last around two years and ‘on yer bike’!
What I found fascinating is that the average age of vehicles in U.S. driveways hit a record high last year. “It rose to 10.8 years as of July 1,” automotive data firm R.L. Polk & Co., said Tuesday, “marking the 10th consecutive year that the U.S. vehicle fleet has gotten older.”
As with any good economical cycle there are peaks and troughs; U.S. sales peaked at about 17 million vehicles in 2005, but plunged to 10.4 million in 2009. That collapse in new-vehicle purchases during the recession contributed to the age of the fleet sitting at a record high.
The boom in sales in the late nineties makes our scenario particularly difficult for manufacturers these days. Some believe that the ‘Detroit Three’ caused Americans to buy too many vehicles in that period through incentives packages and the knock on effect is that they have remained in families as our economies have waded through multiple recessions.
Some analysts forecast sales of about 13.5 million this year and Polk is expecting them to rise to 16 million by 2015. Whatever those levels may end up being, the level of U.S. sales is critical in Canada’s auto manufacturing sector because about 80 per cent of the approximately two million vehicles made here annually are sold in the U.S. market.
“What’s happening now is that Americans are “flushing out” excess vehicles and reducing density, or the number of vehicles for every person of driving age,” Citibank analyst Itay Michaeli said in a report earlier this month.
“The severity of the ‘flush’ was caused both by the deep economic downturn and the ‘over-buy’ that occurred since the late-1990s, unquestionably aided by incentives and credit,” Mr. Michaeli wrote.
“The longer-term outlook for U.S. auto sales in many ways depends upon younger generations accumulating as many vehicles/household as their parents and grandparents did over the past 20 years. Much of this will depend on U.S. economic growth and prosperity, but so far it does not appear that the younger generations are planning to win the arm wrestle.”
The average age of vehicles in Canada has also risen since 2005, according to Polk data. Industry analyst Dennis DesRosiers estimates that the average vehicle hit an age of 8.57 years in 2011.
“We get rid of old vehicles while the Americans find an owner who doesn’t mind driving a [clunker],” Mr. DesRosiers noted in explaining why the average age of vehicles in Canada is lower than in the United States. That’s one reason why the number of vehicles per driving age population in Canada is in the 75-per-cent range, while it’s close to 100 per cent in the U.S. market.
The problem that automotive manufacturers are faced with now is multiple to say the least. A tough economy means cut-backs in expenditure and as cars are built to last longer now than ever, the owner has the option of waiting a few more years to see what the economy will do before investing in a new set of wheels. Fewer cars on the road would in theory mean better pollution levels, but in reality that is not true. Newer engines are far more enviro-friendly than they ever have been and it’s those old ‘clunkers’ that are spitting out all those nasty gases. If fewer vehicles are being purchased, fewer are being manufactured and so the jobs available are scaled down too, pushing up unemployment. On the contrary, older cars mean more repairs, so mechanics and their workforce have plenty of work to carry out in the post-sales market.
With an incredibly tough selling environment for manufacturers these days, what would it take for you to be convinced to buy a new vehicle if you were still undecided? Do you now look for multiple aspects of a vehicle where as maybe in the past it was just a matter of speed or aesthetics?
Billy Lyon
MotoringTV online editor
