SOUTHFIELD, Mich.--(BUSINESS WIRE)--The average age of light vehicles in operation (VIO) in the U.S. has once again climbed slightly this year, to 11.6 years, according to industry experts at IHS Markit (NASDAQ: INFO), a leading provider of business information and analysis for the global automotive industry.
Registrations for light VIO, including cars and light trucks (SUVs/CUVs as well) in the U.S. also reached a record level of more than 264 million -- an increase of more than 6.2 million (2.4 percent) since last year. This represents the highest annual increase the auto industry has seen in the U.S. since it began tracking VIO growth – breaking the record of 2.1 percent growth set in 2015.
”Quality of new vehicles continues to be a key driver of the rising average vehicle age over time,” said Mark Seng, director, global automotive aftermarket practice at IHS Markit. “The recession created an acceleration beyond its traditional rate due to the nearly 40 percent drop in new vehicle sales in 2008-2009. In the last couple of years, however, average age is returning to a more traditional rate of increase.”
Adding vehicles to the fleet on the road is also a coup for the automotive aftermarket industry – those in components manufacturing, repair and service.
“Increasing numbers of vehicles on the road builds a new business pipeline for the aftermarket,” Seng said. “A larger fleet means more vehicles that will need repair work and service in the future.”
Consumers holding onto vehicles longer; scrappage rate remains flat
According to IHS Markit, consumers are continuing the trend of holding onto their vehicles longer than ever. As of the end of 2015, the average length of ownership measured a record 79.3 months, more than 1.5 months longer than reported in the previous year. For used vehicles, it is nearly 66 months. Both are significantly longer lengths of ownership since the same measure a decade ago.
When it comes to vehicles being scrapped, those taken out of services during 2015 remained relatively flat compared to 2014, with just over 11 million light vehicles retired out of the fleet, representing about 4.3 percent of the overall population. This figure is significantly less than the record high of more than 14 million vehicles that were scrapped in 2012.
As fleet ages, VIO shifts create new opportunities
The average age growth of the vehicle fleet will bring new opportunity for the automotive aftermarket, the analysis says. The 40 percent drop in new light vehicle registrations experienced during the downturn in 2008-10 is something that will be felt by those businesses involved in the aftermarket for years to come due to its significant impact on the various age segments of the overall fleet. This measure is closely monitored, as it is important to business planners in the aftermarket and service industries – the people who manage inventories of parts required and plan for sales and service activity accordingly.
According to IHS Markit, the shifting dynamic of the age of vehicles in operation indicates the volumes of vehicles in the new to five years-old category will grow 16 percent by 2021, while vehicles in the six to 11 year-old range will grow just 5 percent, and vehicles that are 12+ years old will grow 10 percent.
The oldest vehicles on the road are growing the fastest – with vehicles 16 years and older expected to grow 30 percent from 62 million units today to 81 million units in 2021. IHS Markit research also indicates more than 20 million vehicles on the road in 2021 will be more than 25 years old.
Businesses in the automotive aftermarket are working to adjust to the change in the market, and planning opportunities are underway to address the changing landscape. Also, vehicle manufacturers and dealers are working to identify additional new vehicle sales opportunities as new models are replacing those leaving the fleet.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NASDAQ: INFO) is the automotive industry’s leading source for market-wide insight, expertise and advanced planning solutions. With a reputation of enabling better decisions and better results for nearly a century, the world’s leading OEMs, suppliers and their transportation partners rely on IHS Markit to power growth, improve efficiency and drive a sustainable competitive advantage.
Automotive offerings and expertise at IHS Markit span every major market and, the entire automotive value chain -- from product planning to marketing, sales and the aftermarket. Headquartered in London, our automotive team is part of IHS Markit’s information and analytics powerhouse that includes more than 15,000 colleagues in 150 countries, covering energy, chemical, aerospace and defense, maritime, financial, technology, media and telecommunications. For additional information, please visit www.ihsmarkit.com or email firstname.lastname@example.org.
Editor’s Note: Average age and vehicles in operation based on a snapshot of vehicles in operation on Jan. 1, 2016, the most recent analysis from IHS Markit.
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