According to a new S&P Global study, U.S. drivers are holding onto their used vehicles longer than ever before.
The firm’s research found that light vehicles in operation are now 12.5 years old on average, a three-month increase over 2022 and the largest jump since the 2008 recession. Nearly 122 million units on the road have seen longer lifespans. S&P Global has reported increasing automobile ages for six consecutive years but saw numbers ramp up heading into 2023.
Todd Campau, associate director of aftermarket solutions for S&P Global, attributed this sudden burst to economic headwinds resulting from the COVID pandemic. “We expected the confluence of factors…would provide further upward pressure on average vehicle age,” he remarked, “But the pressure was amplified in the back half of 2022 as interest rates and inflation began to take their toll.” Yet in the coming months, the car market may see this trend reverse. “While pressure will remain on average age in 2023, we expect the curve to begin to flatten this year as we look toward returning to historical norms for new vehicle sales in 2024.”
S&P Global believes this trend will lead used-car retailers to raise their ideal age range to include the 12.5 average instead of the typical 6-11 years. The firm argues the increase is a net positive, particularly for aftermarket and fixed operations providers. “For this year, early indications…estimate a potential revenue increase in 2023 of 5% or more, prior to adjustments for inflation and other factors,” the study notes.