New research from IHS Markit shows that the average age of light vehicles in operation in the U.S. has risen to 11.9 years this year, about one month older than in 2019. Though slight, the increase can generate new business opportunities for companies operating in the aftermarket and vehicle servicing sector.

Several factors have contributed to push U.S. average vehicle age higher. While vehicle scrappage rates have increased and would be expected to cause average age to drop, the growth in new-vehicle sales has plateaued. Having fewer new vehicles added to the U.S. vehicle population has offset the potential drop in average age.

Underlying weakness in several segments of the market, combined with increased vehicle prices, provided upwards pressure on average age of vehicles, as consumers weigh their cyclical goods expenditure, opt for longer-term financing options or hold onto their vehicles for a longer period of time.

“At the start of 2020, all signs were pointing to moderate growth of the average age of vehicles through the first half of the decade, and there was certainly growing pessimism about how long the strong economic fundamentals could last,” said Todd Campau, associate director of Aftermarket Solutions at IHS Markit. “However, the COVID-19 pandemic has created the perfect storm to accelerate U.S. light vehicle average age in coming years. This should be a positive side effect for the aftermarket, as the majority of repairs for older vehicles come through the aftermarket channel.”

New-vehicle sales provide the pipeline for young vehicles coming into the marketplace. Prior to the pandemic, sales in the U.S. were already trending downward, representing just 6.1 percent of vehicles in operation in 2019, compared to 6.7 percent in 2016, the last record-setting sales year. Given the latest IHS Markit forecasts for the further slowdown in light of COVID-19, U.S. new-vehicle sales in 2020 are expected to account for 5 percent or less of all vehicles on the road in 2020. Declining new vehicle share in the overall population means fewer younger vehicles to temper average age growth.

Scrappage is the measure of vehicles exiting the active population. In 2019, scrappage rate as a percent of vehicles on the road was 5.1 percent, while in record sales year 2016, was just 4.6 percent. An interesting comparison year for 2020 would be 2009 when new vehicles sold represented 4.2 percent of vehicles in operation (VIO) and scrappage stood at 5.2 percent, resulting in a rapid increase in average age, increasing by 4 months throughout that year.