Why Consumers Are Keeping their Vehicles Longer

There are many contributing factors as to why consumers are keeping their vehicles longer than ever before. Let’s start out with the total number of light duty vehicles in operation on U.S. roads. At the end of Q1’24 we have 289.6 million vehicles on U.S. roads, a 1.2% increase over the same period in the previous year as reported by S&P Global Mobility. 

Record High Average Age of a Vehicle on U.S. Roads

In Q1’24, 16.9 million new vehicles were registered while 13.3 million vehicles went out of operation. The average age of a vehicle on U.S. roads today (June 29, 2024) is around 12.6 years old, a record high. [reported by S&P Global Mobility] 

Reasons why consumers are Keeping their Vehicles Longer

There are several reasons why consumers are holding onto their vehicles longer, here are a few contributing to this trend: 

  • The High Cost of New Cars: The average price of a new car in the US has increased reaching more than $48,000 in April 2024*. This results in new cars becoming less affordable for many consumers, especially new to the labor market. In 2020, the average price of a new car in the U.S. was $40,770, a difference of more than $7,000. 
  • The High Cost of Used Cars: In 2023 average price of a user car in the US increased by more than $10,000 since 2020. We have two upward trends with the average price of a new and used car increasing. This is not a win for consumers. 
  • Improved Vehicle Reliability and Parts Availability: With the increase in vehicle reliability and parts availability, consumers are continuing to invest in their vehicles driving them well past the 100,000 mile mark. Consumers use sites like Openbay to get matched with an automotive service professional nearby that delivers quality service at discounted prices. This allows consumers to hold on to their vehicles for longer periods of time while maintaining a safe and well operating vehicle. 
  • Record High Auto Loan Rejection Rates: The Federal Reserve Bank of New York is reporting a record 14.2% of applicants are being denied an auto loan in the past year (as of June 2024). It’s the highest percentage since tracking began just over 10-years ago. Rising interest rates are contributing to loans becoming more expensive and lenders become more risk-averse, especially for consumers with low credit scores.
  • Record High Delinquency Rates: In addition to record high auto loan rejection rates, the Federal Reserve Bank of New York is also reporting delinquency rates on auto loans are also at their highest point during the same period, reaching 7.7% in Q4 2023.  


*source: Edmunds.com


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