Cars Keep Getting Older
Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager
In 2012, I wrote the online course, “How to Buy a New or Used Car and Save Thousands”, . In researching the course, I was surprised to learn about the average age of cars on the road in the US.
In the midst of one of, arguably the greatest economic downturn the our country’s history, USA Today reported in March 2010, that “The average age of cars and trucks in the U.S. is now at its highest level since at least 1995 (the first year for which records were kept) and more cars were scrapped last year than were registered.” This last datum is a bit misleading because 2009 was the “Cash for Clunkers” failed economic experiment that hand the unintended d(but predictable) consequence of driving up used car prices by making them more scarce.
R L Polk reported that in July 2011, “the average age of the cars and trucks on U.S. roads hit a record 10.8 years as worries about job security the economy kept many people from making big-ticket purchases”. The relationship between new car purchase and used car sale (mostly in the form of trade-in) is nearly one to one so with fewer new car buyers came fewer trade-ins. The scarcity of the used cars and the 30-year low for new car sales in 2009 created market dynamics which raised used car prices to a premium.
The Associated Press reported this week that the average age for automobiles on the road in the US is now a record of 11.5 years old, according to IHS Automotive. Factors cited were increased reliability of today’s vehicles and the sharp drop of new vehicles sales during the prolonged recession of the Obama years.
While older vehicles lack technological features that “effectively turn cars into cell phones on wheels”, hackers cannot disable the older cars via cassette or CD players! The story goes on to state that the average length of ownership for new vehicles is now nearly 6.5 years and 5 years for used vehicles.
How long should you keep your car?
There is no one correct answer that fits everyone. The technological upgrades and higher quality of manufacturing make for a longer lasting vehicle, up to 200,000 miles according to Doug Love, spokesman for Consumer Reports.
One important consideration for financed vehicle purchases is the length of the loan. Four years should be the maximum term. If you cannot afford the payments on a four year car loan, you are buying too much car! Nevertheless, it is no coincidence that the average length of ownership for new vehicles of 6.5 years is about equal to the length of many car loans.
Here are some questions to answer in order to determine how long you should keep your car.
- How important is a new vehicle to you?
- Do you enjoy cars or trucks in the way some folks prize high technology gadgets? If so, treat yourself to this guilty pleasure.
- Is driving the newest models an imperative or is a car merely a mode of transportation that gets you from point A to point B in (presumably) a reliable fashion?
- Is vehicle expense a major or minor line item in your budget?
- Can you afford indulgence in an automobile and still manage all your other expenses?
As to the last question, the ability to afford a new car every few years should never be a consideration. Just because you can afford it is not a good enough reason. If you can afford it, but value savings and opportunity cash, then manage the vehicle purchase as a necessary expense to be minimized.