Cars drive on the 405 Freeway in Los Angeles. (Photo by Ann Johansson/Corbis via Getty Images)
DETROIT - More Americans are hanging on to their older vehicles longer, a record, because newer ones are simply too expensive, new findings showed.
S&P Global Mobility, which tracks state vehicle registration data nationwide, cars, trucks and SUVs in the U.S. keep getting older, hitting a record average age of 12.6 years in 2024.
However, the growth in average age is starting to slow as new vehicle sales start to recover from pandemic-related shortages of parts, including computer chips. The average increased by three months in 2023.
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Still, with an average U.S. new-vehicle selling price of just over $45,000 last month, many can't afford to buy new — even though prices are down more than $2,000 from the peak in December of 2022, according to J.D. Power.
"It’s prohibitively high for a lot of households now," said Todd Campau, aftermarket leader for S&P Global Mobility. "So I think consumers are being painted into the corner of having to keep the vehicle on the road longer."
Other factors include people waiting to see if they want to buy an electric vehicle or go with a gas-electric hybrid or a gasoline vehicle. Many, he said, are worried about the charging network being built up so they can travel without worrying about running out of battery power. Also, he said, vehicles are made better these days and simply are lasting a long time.
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Are car prices still high?
New vehicle sales in the U.S. are starting to return to pre-pandemic levels, with prices and interest rates the big influencing factors rather than illness and supply-chain problems, Compau said. He said he expects sales to hit around 16 million this year, up from 15.6 million last year and 13.9 million in 2022.
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As more new vehicles are sold and replace aging vehicles in the nation's fleet of 286 million passenger vehicles, the average age should stop growing and stabilize, Compau said. And unlike immediately after the pandemic, more lower-cost vehicles are being sold, which likely will bring down the average price, he said.
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People keeping vehicles longer is good news for the local auto repair shop. About 70% of vehicles on the road are 6 or more years old, he said, beyond manufacturer warranties.
Those who are able to keep their rides for multiple years usually get the oil changed regularly and follow manufacturer maintenance schedules, Campau noted.
2024, a more affordable year to buy new
While new automotive inventories are still below the roughly 4 million level that was common before the pandemic, many analysts and dealers say the rising availability suggests that 2024 will be the most affordable year of the past five in which to buy a new car or truck.
"When the lots are empty, there’s not much of a bargaining position from a consumer standpoint," said Glenn Mears, owner of a four-dealership group around Canton and Dover, Ohio. "But now that we have inventory, it’s much more competitive. Much more like it has been historically."
What caused car prices to spike?
A worldwide shortage of computer chips, which are vital to auto manufacturing and had forced plants to curb production, caused price spikes during the pandemic.
As vehicle availability shrank, prices soared. By 2021, some dealers had no new cars at all in stock. Many frustrated buyers turned instead to the used market. The resulting surge in demand for used cars caused those prices to surge, too, elbowing many people out of the auto market entirely.
But with computer chips now abundant, auto production is rising steadily. This was also helped by the United Auto Workers returning to work after strikes last fall.
The Associated Press contributed to this report. This story was reported from Los Angeles.