U.S. Drivers Holding on to Cars Longer
Initial ownership period hits new record high of nearly 6 years.
A perfect storm of economic and automotive factors is causing U.S. consumers to hold on to their cars for a record length of time, according to the market research firm Polk. Based on Polk’s analysis of U.S. vehicle registrations, the average length of ownership of vehicles that were purchased new has risen to a record nearly six years (71.4 months, to be exact), while the average length of ownership for used vehicles has increased to nearly 49.9 months.
New- and used-vehicle owners combined are holding on to their vehicles for an average of 57 months. That equates to a 23 percent increase in the length of vehicle ownership since the third quarter of 2008, which coincides with the economic downturn. But there’s an element of this trend that automakers are causing themselves: New cars are more reliable and last longer than ever.
Of course, economic factors have contributed the most to this trend, according to Polk, which analyzed vehicle registration data through September 2011. With an anemic job market and still-high unemployment rates, consumer spending remains cautious, and many buyers have opted for longer-term financing options that result in more affordable payments.
But another reason for the recent reluctance by U.S. drivers to buy another car is that newer vehicles are more reliable than ever. Plus, several manufacturers now offer longer new-vehicle warranties, which also cause consumers keep vehicles longer.
But Polk's latest findings -- along with its recent research that shows an increased average in the age of vehicles currently on the road that now stands at 10.8 years for cars and light trucks combined -- is potentially good news for the automotive aftermarket and parts suppliers.
"As the aftermarket prepares to service this aging vehicle population, this creates concerns about appropriate parts inventory," said Mark Seng, Polk’s global aftermarket practice leader. "As a result of our analysis, we're currently working with customers in the aftermarket to help them prepare for increasing demand throughout the entire supply chain.”
The outlook doesn’t look promising for new-vehicle sales in the first half of this decade, however. According to Polk analysts, new-vehicle sales won’t reach pre-recession levels of 16 million units until 2015. Plus, Polk doesn’t foresee a decline in the length of ownership over the next few years. "Unemployment rates continue to be high,” Seng said, “and we expect many consumers will suffer from the lingering effects of the downturn, further contributing to longer ownership trends."
Another byproduct of this trend: An earlier analysis by Polk found that brand loyalty decreases among new-vehicle buyers the longer they keep their cars or trucks. Combined with recent research that shows that younger car buyer aren’t as brand-loyal as their parents, automakers and car dealers will have their work cut out for them in moving the metal in the next few years.
I am driving a 2001. Looks good. Runs good. Paid for. Gets reasonably good MPG. Cheep to insure.
I'd get a new car.... But I am not willing to spend as much as it costs for the car that I really want. Maybe I'll get a used version of it instead...
I will check out the new ATS and 3 series with the turbo-4.
Another reason people are not buying new cars (as well as other "toys") is they can no longer poach the equity in their homes as a revolving line of credit.
This type of activity was the major reason the economy was so artificially pumped up in the last decade. Now it's coming down to reality.
Of course a lot of those same individuals now find themselves "under water" on their home mortgages and are crying to be bailed out by those of us who demonstrated some semblance of fiscal responsibility.
New cars costs more with higher insurance, more fees, more taxes, interest, faster lost in value within the first 3 years and absolutely uncessary. We have to live within our mean.
Polices and cameras generate more million in revenue for their cities and new cars are perfect target. Traffic tickets has skyrocket and reach between $200-500 for speeding violation. (Whose is not speeding and above speed limits.)
You cannot live in your expensive car with no job and we would rather save money for a raining days ahead. New expensive cars would not make you a better person or more respect.
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