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Americans are holding their cars longer as interest rates rise

Cars, trucks, SUVs, and other vehicles are jammed on Highway 405 through the Sepulveda Pass in Los Angeles, California on August 25, 2022.

Patrick T. Fallon | AFP | Getty Images

DETROIT — The average age of passenger cars on U.S. roads soared to record levels this year as car owners keep their cars longer amid a low supply of new cars. soaring prices.

The average age of small cars on U.S. roads has increased by more than three months, the highest year-over-year increase since the Great Recession of 2008-09, as of January 1, according to a new report. 12.5 years.from monday S&P Global Mobility. This includes passenger cars up 3.8% to 13.6 years and trucks, SUVs and crossovers up 1.7% to 11.8 years.

Rising vehicle age is good news for aftermarket parts suppliers such as: auto zone, oreilly automotive and advanced auto parts. While this could benefit dealer service centers, it doesn’t bode well for new car dealers and sales.

“As the average age continues to rise, the aftermarket and repair market as a whole is clearly the winner,” said Todd Campau, Associate Director of Aftermarket Solutions at S&P Global Mobility. “The more old vehicles on the road, the more repairs they need.”

In total, more than 284 million vehicles are on US roads, according to S&P Global Mobility.that’s all slightly down from last year’s 283 million.

Average car age last year was under upward pressure initially from supply constraints that caused low levels of new car inventories and then from slower demand as interest rates rose and inflation fell, according to a report by S&P. . consumer demand later this year.

New and used car prices have skyrocketed since the beginning of the year. coronavirus pandemic, as the global health crisis combined with supply chain problems sporadically halted production of new vehicles.Costs and Stock Shortages Led Consumers to buy more used carstheir prices also rise.

In addition, the Fed’s move to raise interest rates 10x interest rate It has not contributed to new car sales since March 2022.

Cox Automotive reported that the average list price for a used car in April was $26,799, the highest price of the year. The average transaction price for a new car in April was $48,275, up 3.7% ($1,744) from the same month last year.

truck dominates

Part of the price increase is due to the shift in vehicle mix from passenger cars to utility vehicles.

The number of passenger cars on the road is set to fall below 100 million for the first time since 1978, according to S&P, as U.S. consumers want the big cars automakers are happy to produce at high margins.

“Pickup trucks are staying healthy … staying pretty stable,” Campau said. “The real driver here is the crossover utility vehicle that replaces the passenger car for most families.”

S&P reports that 78% of all new cars registered last year in the US in 2022 will be crossovers, trucks and SUVs.

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