Average Age of Vehicle Fleet

The average vehicle age tends to decline during periods of economic growth because people are more likely to purchase new cars, and it increases during recessions because fewer durable goods, such as vehicles, are purchased. The average age has steadily risen over the long term, though, due in part to the construction of longer-lasting cars reducing the need for replacement. In addition, vehicle ownership in general has expanded. A, more significant proportion of households than ever own two or more cars, and the number of younger drivers has increased over the past few decades. However, the expansion in the number of vehicles driven has yet to lead to greater vehicle production because these people often opt for cheaper secondhand models

The recession of 2008 and 2009 helped continue the slow rise of the average age of vehicles as consumers had less disposable income and chose to put off durable goods purchases, such as cars. Other factors have been driving the vehicle age up as well. Plunging oil prices following the 2008 financial crisis reduced the incentive for drivers to replace their older, less fuel-efficient vehicles. Also, the proliferation of trucks has pushed down the average age because the useful life of a truck is less than that of a car in response to the higher output demanded from them, such as hauling and towing. Rising oil prices reversed this trend and consumers became more interested in fuel-efficient vehicles over the current period. The trade-up to newer vehicles mitigates the growth of the average age because, on the one hand, consumers are purchasing new vehicles, but on the other hand, they are likely to keep them longer.

In 2020, the COVID-19 (coronavirus) pandemic and its subsequent effects on the global economy put upward pressure on the average age of vehicle fleet. High unemployment and a decline in disposable income will push consumers to delay new vehicle purchases. Even as the economy has reopened, the average age of the vehicle fleet has increased further, increasing at a rate of 2.2% in 2021 as the strong durability of automobiles makes them costly purchases, which remains a tempering factor in growth and demand especially as the year before 2021 left many consumers uncertain in terms of the direction of the economy. While consumer confidence spiked in 2021, it did not necessarily lead to spikes in automobile purchases because of how the COVID-19 (coronavirus) pandemic pushed many consumers to save and spend on essential items rather than big-ticket purchases. Similarly, the push for remote work in 2020 which continued in 2021 disincentivized the need for more new cars even for consumers that had more disposable income at the time as the additional costs to maintain a car and acquire insurance remain a tempering factor into this potential development.

With inflation overshadowing much of 2022, the sales of new cars remained pressured in the year, keeping the average car fleet age up from the previous year as consumers started to save rather than spend to avoid these increased costs encroaching on their income more heavily. As inflation has remained a present factor in 2023, the fleet age remained upward from the previous year when these factors were not as very present. In spite of these factors, the sales of new automobiles have remained up in 2023 according to IBISWorld estimates which raises the stakes that perhaps the age of the vehicle fleet will go down as more consumers make purchases of newer vehicles which could outweigh the amount of older vehicles in the market. However, the strong presence of used cars in the market will play a role in the aging up of the vehicle fleet especially while consumers retaining older models from past years until prices improve will upscale the average fleet age in the period despite the better improvement of new car sales in the same year. The presence of these factors will play a role in the age of the vehicle fleet going up in 2024. The introduction of electric vehicles (EVs) and newer car models equipped with autonomous features is expected to lower the vehicle fleet's average age in 2024. However, as these models become more familiar and widespread in the market, the average age of the fleet is likely to increase again in 2025, as their novelty fades.