NEW VEHICLES Archives — Auto Trends Magazine

IHS Automotive issues latest snapshot of vehicles in operation.

Classic cars such as this Chevrolet Corvair convertible
are among the vehicles Americans still drive today.

That aged clunker you are driving might be in good company after all. On Monday, IHS Automotive released its latest analysis of the 252 million passenger vehicles registered in the United States and found that the average age for this “fleet” is 11.4 years as of 2013. That number has held steady, the first time in five years that the average age did not increase.

IHS Automotive VIO

IHS Automotive (inclusive of Polk) says that there are more than 252,700,000 light vehicles in operation (VIO) in the United States, increasing by 3.7 million in 2013. Two reasons for the rise in registered vehicles are: an increase in automotive sales for 2013 and a decrease in scrappage rates. Scrappage describes automobiles that are discarded, with registrations canceled and the cars sent to junkyards.

IHS data also separates cars from light duty trucks. In both categories the average age was 11.4 years, reflecting a slight increase in the age of pickup trucks.

“In our history of tracking, we have seen a gradual increase in the average age of vehicles on the road,” said Mark Seng, director, aftermarket solutions and global aftermarket practice leader at IHS Automotive. “This year, we’re seeing somewhat of a plateau in the market, and expect it to remain over the next few years, without a major change in either direction. We attribute this to a number of factors, including the economy and the increasing quality of today’s automobiles.”

That increased quality has consumers shopping for cars that they intend to keep for many years, perhaps much longer than what they would have considered a generation ago. Indeed, consumers are also financing their cars longer, with 72-month auto loans now commonplace.

auto loans

Rising Average Age

IHS forecasts that the average age of passenger vehicles will continue to rise, hitting 11.5 years in 2017 and 11.7 years in 2019. Notably, the volume of vehicles aged 0 to 5 are expected to increase by 32 percent over the next five years while vehicles aged 6 to 11 will decline by 21 percent. Vehicles that are at least 12 years old are expected to increase by 15 percent by 2019.

The latter figure will most likely be of interest to aftermarket companies and repair outlets. The first group may look for ways to help consumers keep their cars relevant, by selling to them navigation systems, backup cameras and security systems not found in older cars. The second group is composed mostly of garages and mechanics, the people that can keep old vehicles functioning for many years.

Average Price New Car

Another factor that may be keeping many Americans out of the new car market is the average price of a new car. That average price was $32,086 in 2013 reports AOL Autos although we on Auto Trends have found quite a few new models ranging in price from $15,000 to $20,000. Small cars all, but within the price range of many new car shoppers.

Fiat makes cars that are on the lower end of the price spectrum.

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Experian Automotive Report

The Experian Automotive report reveals that 84.5 percent of consumers who acquired a new vehicle in the second quarter either leased it or obtained a loan. That number is up from 82.5 percent one year earlier and from 79.7 percent five years earlier. Notably, the 2008 figure is just before the last recession kicked in.

Said Melinda Zabritski, senior director of automotive credit for Experian Automotive, “Loans have become more accessible in recent years, and we’ve seen a steady growth in the percentage of consumers financing their vehicles.” Zabritski noted that consumers are more confident about taking out a loan as evidenced by the corresponding reduction in delinquencies.

To obtain financing, consumers need not have excellent credit, but it certainly provides better financing options when they do. Loan and lease terms are set according to a number of factors with the consumer’s three-digit credit score playing no small part in that equation. Consumers had an average credit score of 760 for new vehicle leases and 749 for new vehicle loans according to the report.

Leasing and Lending

Lease payments typically average lower than financing, something the latest report confirms. Monthly lease average payments of $408 were nearly $50 less than the $457 for new vehicle loans. Lease terms averaged 35 months and new car loan terms averaged 65 months in the second quarter of this year.

Consumers with less than stellar, even bad credit, can often qualify for a lease or a car loan too. For new cars, 27.45 percent of loans were categorized as nonprime, subprime or deep-subprime. For used cars, 57.31 percent of loans were similarly categorized.

The average price of a new vehicle is more than $30,000, thus the average amount financed for a new vehicle was $26,526 and $17,913 for used. Interest rates have been tracking higher lately, but the average interest rate on a new car loan was 4.46 percent and 8.56 percent for used. Used car loans are also not too far behind new car loans in loan length, averaging 61 months to the 65 months for new cars.

Your Personal Credit

Consumers on the hunt for a new car can find a vast trove of information on the Internet. Just as you would shop and compare vehicle offers between dealers, you can do the same with lenders for loans. Banks, credit unions and new car dealers are among the places to look for a new car loan. Your dealer most likely will arrange your leasing although there are other leasing options available.

You can help your cause by reviewing your credit reports and obtaining your credit score before you shop for a car. Free copies of all three of your credit reports (Experian, Equifax and TransUnion) are available through AnnualCreditReport.com You can obtain your credit score through this site for a fee or by visiting MyFico.com. Experian Automotive is, by the way, part of Experian plc, one of the three major credit reporting bureaus serving American consumers.

NEW VEHICLES

Auto Trends: Average Age of Cars is 11.4 Years