Americans Drive One Car for an Average of 12 Years

[Asia Economy Reporter Park Byung-hee] The average lifespan of cars in the United States exceeded 12 years for the first time ever last year, the Wall Street Journal (WSJ) reported on the 14th (local time), citing market research firm IHS Markit.

IHS Markit stated that the average lifespan of cars in the U.S. was 12.1 years last year. IHS Markit explained that the average lifespan of cars in the U.S. has steadily increased over the past 15 years, and the COVID-19 pandemic accelerated this trend. Due to reduced outdoor activities during COVID-19, new car purchases declined, and the lifespan of cars increased.

[Source= The Wall Street Journal]

Todd Campau, director at IHS Markit, explained that rising car prices and improved car quality have led Americans to keep their cars for longer periods. He noted that 20 years ago, a typical car usually had 1 to 2 owners and an average mileage of about 100,000 miles, but now it is increasingly common for a car to have multiple owners and exceed 200,000 miles.

Campau said that the increase in average lifespan cannot be interpreted solely as reluctance to purchase new cars and a desire to keep current cars longer. New car sales still remain at record-high levels. According to IHS data, the number of cars in the U.S. has increased by about 10% since 2013, reaching 279 million vehicles currently.

Campau emphasized that the number of cars owned per household is increasing. He also advised that since cars are being used longer, automakers should strengthen after-sales services.

Automakers are also focusing on continuously maintaining relationships with customers by expanding digital services after sales. Jim Farley, CEO of Ford, recently emphasized in an interview that the traditional approach of selling cars and waiting for customers to buy again should be broken, and that automakers should maintain constant relationships with customers. He said that new features should be added daily and hourly, like smartphones, and that this is a real competitive advantage.

According to another market research firm, JD Power, the average price of new cars in May reached a record high of $38,255. JD Power explained that new car prices have steadily increased since the 2008 global financial crisis, and the upward trend accelerated over the past year due to supply chain disruptions. Used car prices have also steadily risen. According to auction company Manheim, used car prices in May increased by 48% compared to the same month last year.