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People are retaining their automobiles longer amid rising rates of interest

Automobiles, vehicles, SUVs, and different autos drive in site visitors on the 405 freeway by the Sepulveda Move in Los Angeles, California, on August 25, 2022.

Patrick T. Fallon | AFP | Getty Photos

DETROIT — The common age of passenger autos on U.S. roadways climbed to a document this 12 months, as automobile house owners maintain on to their autos longer amid low provides of recent autos and sky-high prices.

The common age of a light-duty automobile on U.S. roads rose by greater than three months — the best year-over-year improve because the Nice Recession in 2008-2009 — to 12.5 years as of Jan. 1, based on a brand new report Monday from S&P Global Mobility. That features a 3.8% improve for passenger automobiles to 13.6 years and a 1.7% uptick in vehicles, SUVs and crossovers to 11.8 years.

Rising automobile ages are excellent news for aftermarket components suppliers like AutoZone, O’Reilly Automotive and Advance Auto Parts. It can also profit supplier service facilities, but it surely does not bode properly for brand new automobile sellers and gross sales.

“The aftermarket and the restore market as an entire is certainly a winner as the common age continues to develop,” mentioned Todd Campau, affiliate director of aftermarket options for S&P International Mobility. “The extra older autos which might be on the street, the extra repairs they want.”

In complete, S&P International Mobility stories there are greater than 284 million autos in operation on U.S. roads. That is up slightly from 283 million last year.

S&P stories the common automobile age final 12 months skilled upward stress initially attributable to provide constraints that brought on low ranges of recent automobile stock, after which by slowing demand as rising rates of interest and inflation lowered consumer demand within the second half of the 12 months.

New and used automobile costs have been elevated because the begin of the coronavirus pandemic, as the worldwide well being disaster mixed with provide chain points brought on manufacturing of recent autos to sporadically idle. The prices and shortage of stock led customers to buy more used vehicles, growing these costs as properly.

As well as, the Federal Reserve’s strikes to lift interest rates 10 times since March 2022 haven’t assisted new automobile gross sales.

Cox Automotive stories the common listed worth of a used automobile was $26,799 in April — the best worth level this 12 months. The common transaction worth for a brand new automobile was $48,275 in April, up 3.7%, or $1,744, from a 12 months earlier.

Vans dominate

A part of the pricing improve is as a result of automobile combine, swinging away from passenger automobiles to utility autos.

The variety of passenger automobiles on the street will fall under 100 million for the primary time since 1978, based on S&P, as U.S. customers demand bigger autos that automakers are fortunately constructing at greater revenue margins.

Why the American car fleet is getting older

“Pickup vehicles have stayed wholesome. … They’ve stayed fairly constant,” Campau mentioned. “The true driver right here is the crossover utility automobile that actually has displaced the passenger automobile for many households.”

In 2022, S&P stories 78% of all new autos registered within the U.S. final 12 months have been crossovers, vehicles or SUVs.

EVs growing

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