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Americans are driving their cars longer

Sales are up, and fewer vehicles are being sent to the junkyard. That could mean good news if you're in the market for a used car.

By Credit.com Nov 8, 2013 1:01PM

This post comes from Christine DiGangi at Credit.com.


Credit.com on MSN MoneyNot only are there more cars on the road than there have been in recent years, they’re also older.

 

In the second quarter this year, the number of cars and light trucks on the road reached its highest point since the third quarter of 2008: 247.9 million, according to Experian Automotive.

 

Car on road (© Brand X/SuperStock)The average age of those vehicles is 10.9 years, a year older than it was four years ago, and when it comes to the kinds of cars out there, General Motors had the highest share, at 26.6 percent, followed by Ford (18.9 percent), Toyota (12.6 percent) and Chrysler (12.5 percent).


Vehicle sales dropped during the recession but have recently surged. That, combined with fewer vehicles being scrapped in the second quarter, contributed to the number of older cars on the road.


What This Means for Shoppers

This has implications for consumers looking to buy a car and possibly take out an auto loan. For anybody looking for a used car, it's good news.


"As inventory increases, particularly inventory of more late-model used vehicles out there, the potential value of the vehicle comes down," said Melinda Zabritski, senior director of automotive credit for Experian. "It could lead to slightly less expensive used cars."


But the affordability of a car depends on more than the make and model -- a potential buyer's credit makes a difference in total cost, because consumers with higher credit scores will be offered lower interest rates. In addition, higher scores can help lower car insurance rates. Aside from payments, car insurance, plus fuel and maintenance contribute to the cost of operating a vehicle.


Younger cars carry the industry

While the average age of all cars on the road was up in the second quarter, about half (50.9 percent) of them were between model years 2000 and 2008. So even as much older cars contributed to the high average age, they make up a small portion of cars on the road.


Then there are even newer cars: Consumers who financed vehicles in the same quarter most frequently took out loans on 2010 model cars, and model years 2010 to 2013 accounted for 38.7 percent of auto loans.

Lenders set different cut-offs on which model year vehicles they will finance, and the statistics for vehicles in operation help them determine loan terms and pricing on older cars. When it comes to the lending market, the number of vehicles in operation has the biggest impact on supply and demand.


In 2008 and 2009, new car sales were low and used car prices were high as a result of higher demand. That led some consumers to buy new cars, when they typically would have bought used.

 

Zabritski said consumers exhibit patterns: Some regularly look to used cars when buying a vehicle, and others gravitate toward the new ones. During the recession, there was more potential for consumers to deviate from those patterns because of higher used car prices. As indicated by high sales and more vehicles on the road, the recovery has balanced out the inventory in favor of used-car shoppers, and that is likely to re-establish traditional patterns.


More from Credit.com:


21Comments
Nov 8, 2013 5:23PM
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Keep your old ride as long as you can. The new ones are all over priced ,hunks of shinny metal.I am not trying to impress anyone.Fix the old one and go
Nov 8, 2013 5:52PM
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No kidding! When a new car costs as much as my 1st home and depreciates in value at a alarming rate, YES! We are keeping cars longer! Only fools would think otherwise.
Nov 8, 2013 4:54PM
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People can't afford to get a new car as often as they use too.
Nov 8, 2013 5:57PM
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My old '91 F-150 still gets me to work and back--the engine is still sound.
Nov 8, 2013 1:25PM
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Cars are lasting longer so folks can now drive them longer. What a shocker.
Nov 8, 2013 6:45PM
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My approach is that if it isn't broke, don't fix it.

I keep vehicles until I actually need something different or until it become too expensive to repair sensibly.

Then I go buy used because the depreciation on new cars is so steep it is a bad investment if you pay cash, even worse if you finance it.
Nov 8, 2013 5:55PM
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With the way cost of living has went up vs wages being cut/stagnant, Joe Schmo can't afford a new car every few years any longer. Maybe people also realized that buying a new car is a waste of money since it depreciates so quickly. Who wants to pay $30k for something that will be worth 10% of that 10 years down the road?
 
Nov 8, 2013 7:41PM
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Only one of our vehicles are newer than 2006.  Two of them were made before 1966.  The '51 is worth about the same as a new pickup.  It cost $1895 brand new.  I won't be selling it soon, and I keep updating it.  great investment, and prime recycling.
Nov 11, 2013 12:50PM
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Forty years long enough? got an old 77 ford LTD made of iron and steel, and an old 88 Dodge truck, Got no use for this new plastic crap that folds and bends when you touch them...
Nov 11, 2013 1:34PM
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Nothing much has changed in the last several years. For about $7-1200 for a master tune up and part inspection/replacement every 150k miles you can get another 150k miles or more. I have a JEEP with 225 miles on it I just redid and everything has a multi-year or life warrantee. I had a 94 Honda from new with 500k miles on original engine until it was wrecked. Not one major issue but I did replace alternator & starter & changed all my seals.
 Even my mustang had lots of miles after I was done. Going to school work girlfriend and home was about 115 miles a day. All you need is regular maintenance and inspection
Nov 11, 2013 1:09PM
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As long as Obama's in office only an idiot would go chunk down a wad of cash on a new car.
Nov 11, 2013 2:06PM
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It all depends on what you use the car for most of the time.  Use it for errands or work, drive it for 10 years +.  Use it for long trips (over 500 miles), you need a newer car or risk spending your vacation in some place along the route while the car is being fixed.
Nov 11, 2013 2:01PM
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I could NEVER afford a newer car I drive a 94 Mazda ( due to long commute time)sure I dream of a newer one but alas I can only dream
Nov 11, 2013 2:19PM
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We would all do well to completely uncouple ourselves from the mass consumption paradigm and leave the "job creator " class to learn a hard lesson as to where the economic engine fuel of this society really lies.
Nov 11, 2013 7:37AM
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After more than 5 decades of sculpting America so most of it has no choice but to drive to get anywhere, the car is essential. The number of junkers out-number those new cars that apparently are selling like hotcakes. We see them... blue hairs and geezers wearing magnifying glass lenses drive them, texters drive them and that other group-- the ones who aren't coordinated enough to drive them, they AIM them and the rest of us are forced to drive defensively in their vicinity. For all the money we invested in bailing throwbacks to the 20th Century, just think-- we could have bio-diesel buses and urban-to-urban commuter lines in place. But noooo... we need a Keystone Pipeline and we want it NOW... before those 80+ year old Gas & Oil Moguls kick the bucket.

 

I'll take our Free America with Life, Liberty and the Pursuit of Happiness back please, and Wealth vs. Guns Gold & Ammo battling it out Death Valley for the most useless forms of life on Earth.

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