Average age of US cars on the road hits record high
Americans are keeping their cars longer than ever, the Associated Press reports. According to data gathered by S&P Global Mobility, the average age of a passenger vehicle on the road hit a record 12.5 years this year.
Since the pandemic struck three years ago, the average price of a new vehicle has rocketed 24% to nearly $48,000 as of April. Typical loan rates on new-car purchases have ballooned to 7%, a consequence of the Federal Reserve’s aggressive streak of interest rate hikes to fight inflation. It’s all pushed the national average monthly auto loan payment to $729 — prohibitively high for many.
Used vehicle prices, on average, have surged even more since the pandemic hit — up 40%, to nearly $29,000. With an average loan rate having reached 11%, the typical monthly used vehicle payment is now $563.
The average vehicle age, which has been edging up since 2019, accelerated this year by a substantial three months. And while 12.5 years is the average, more vehicles are staying on the road for 20 years or more, sometimes with three or four successive owners.
On the other hand, S&P predicts that U.S. new vehicle sales will reach 14.5 million this year, from about 13.9 million last year. Automakers have begun to restore some discounts that had long helped keep a lid on prices. The result could be a boost in overall sales.
Still, no one is predicting a return to pre-pandemic annual sales of around 17 million anytime soon. Even with discounts, new-vehicle prices are likely to stay much higher than pre-pandemic levels for years to come.