The effects of new vehicle inventory shortages, along with the Federal government pushing interest rates, are becoming evident as American cars, trucks, and SUVs hit a record for being older than ever. According to the latest intelligence from S&P Global Mobility, the average age of vehicles on the roads today is 12.5 years old; this is the sixth straight year of average vehicle age increases. The previous average was 12.2 years old.
The effects of older vehicles being on the road are extremely beneficial for repair and aftermarket companies. Since a car is older, there’s more money to be made in repairs, and new parts need to be built as automakers stop supporting older models. Unsurprisingly, out of cars and light-duty trucks in the country, light-duty trucks are winning the hearts and wallets of the masses. That’s probably due to safety and versatility, as light trucks/utility vehicles have more space for cargo and fit the adventurous lifestyles people have been adopting.
Though there is some good news as S&P believes 2023 to be the last year we feel these lingering effects of the pandemic, and we should return to conventional trends in 2024. But without any indication of high-interest rates curving downwards anytime soon, we’ll have to wait to see if that’s true.
Considering that vehicles stay on the road for an average of 12.5 years, we can’t help but wonder if and how electric vehicles will hold up by comparison.
The average life is stagnant at around 3.6 years for an EV, which is significantly less, which means that there’s far more churn, which means high demand for their components, such as crucial and expensive rare earth metals. In other words, more strain on global resources, more waste, and more pollution from the result of mining and the ensuing processing and logistics stemming from this (artificially mandated) demand for electric vehicles. That doesn’t paint a very environmentally friendly picture for EVs, but it does mean more capital churn and profits as a result of the consumerism. Moreover, the aftermarket and independent repair shops have less bandwidth to support electric vehicles, as encrypted control units, special tools/training and parts are all barriers of entry for EV support.
Speaking of consumerism, EV registrations have increased by 58% in 2022 over 2021. Additionally, EVs spend less time registered on the road than their ICE counterparts. That means that EVs are causing people to spend less time on the road and have a shorter life span than ICE vehicles, making us wonder just how successful they will be in actually replacing ICE vehicles in the future.