Mark Seng is a vice president at industry analyst firm Polk. He spoke to Aftermarket Business World about the company's recent forecast for new vehicle sales and the increase in average vehicle age, which has now reached 10.8 years for all light vehicles, 10.4 years for light trucks and 11.1 years for passenger cars.
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Polk has forecast that vehicle sales will continue to rebound slowly over the next several years. When will this start to impact the age of vehicles on the road?
We don't have a specific projection for that, but we will see the increase in new light vehicle sales start to slow down that average age increase. One of the reasons you don't see an immediate impact on vehicle age is because there has been a change in consumer behavior. When you look at the average length of ownership for all vehicles, used and new, it has increased to about 53 months. That's an 18-month increase in average length of ownership over the past 10 years.
People are hanging on to those vehicles longer. So even as vehicles sales take off, they're only rising by about 1 million or 1.3 million year over year, so it will take a while for that to have an impact.
Another interesting thing that's happened is that if you look at the population of vehicles by age, the number of vehicles that are new to three years old has lost 15 million units since 2005. Vehicles 11 years and older have gained 13 million units over that same time period.
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How does the U.S. average vehicle age compare internationally?
In Germany, passenger cars are an average of 8.33 years, and in the UK that stands at 7.83 years. You'll find higher average vehicle ages in places like Mexico and Russia. The rate of average age growth in the U.S. probably stands out as pretty unique right now.
What factors in the U.S. could derail the sales forecast?
Again, consumer behavior is tough to predict. Obviously the biggest thing would be the economy. If the improvements we're seeing, albeit small and slow, if that stalls, if the European economy has the problems that some are predicting, that will impact us as well. If credit plateaus or becomes harder to get like it was a few years ago, certainly it will impact that number. Again, it depends how comfortable people are about going back to the days of buying that second or third car.
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What should the aftermarket take away from these numbers?
The statistics about the new to three-year-old vehicles versus 11 years and older vehicles are an excellent sign for the aftermarket; so are the length of ownership figures.
Another good sign is the number of vehicles under warranty. Right now that stands at about 12 percent. Ten years ago, that was over 21 percent, and it used to be a pretty steady number. That bodes well as an opportunity for repairs that are out there for the independent channel. Those are vehicles that typically go back to the independent aftermarket.
At the same time, the OEMs and their dealer networks see those same statistics and are becoming much more aggressive in developing programs to go after those older vehicles. They are trying to take the lessons they've learned around new vehicle purchase loyalty, and apply them to service loyalty. The competition is going to get much more aggressive.
Mark Seng is a vice president at industry analyst firm Polk. He spoke to Aftermarket Business World about the company's recent forecast for new vehicle sales and the increase in average vehicle age, which has now reached 10.8 years for all light vehicles, 10.4 years for light trucks and 11.1 years for passenger cars.
Like this article? Sign up to receive our weekly news blasts here.Polk has forecast that vehicle sales will continue to rebound slowly over the next several years. When will this start to impact the age of vehicles on the road?
We don't have a specific projection for that, but we will see the increase in new light vehicle sales start to slow down that average age increase. One of the reasons you don't see an immediate impact on vehicle age is because there has been a change in consumer behavior. When you look at the average length of ownership for all vehicles, used and new, it has increased to about 53 months. That's an 18-month increase in average length of ownership over the past 10 years.
People are hanging on to those vehicles longer. So even as vehicles sales take off, they're only rising by about 1 million or 1.3 million year over year, so it will take a while for that to have an impact.
Another interesting thing that's happened is that if you look at the population of vehicles by age, the number of vehicles that are new to three years old has lost 15 million units since 2005. Vehicles 11 years and older have gained 13 million units over that same time period.
{C}PAGE 2
How does the U.S. average vehicle age compare internationally?
In Germany, passenger cars are an average of 8.33 years, and in the UK that stands at 7.83 years. You'll find higher average vehicle ages in places like Mexico and Russia. The rate of average age growth in the U.S. probably stands out as pretty unique right now.
What factors in the U.S. could derail the sales forecast?
Again, consumer behavior is tough to predict. Obviously the biggest thing would be the economy. If the improvements we're seeing, albeit small and slow, if that stalls, if the European economy has the problems that some are predicting, that will impact us as well. If credit plateaus or becomes harder to get like it was a few years ago, certainly it will impact that number. Again, it depends how comfortable people are about going back to the days of buying that second or third car.
PAGE 3
What should the aftermarket take away from these numbers?
The statistics about the new to three-year-old vehicles versus 11 years and older vehicles are an excellent sign for the aftermarket; so are the length of ownership figures.
Another good sign is the number of vehicles under warranty. Right now that stands at about 12 percent. Ten years ago, that was over 21 percent, and it used to be a pretty steady number. That bodes well as an opportunity for repairs that are out there for the independent channel. Those are vehicles that typically go back to the independent aftermarket.
At the same time, the OEMs and their dealer networks see those same statistics and are becoming much more aggressive in developing programs to go after those older vehicles. They are trying to take the lessons they've learned around new vehicle purchase loyalty, and apply them to service loyalty. The competition is going to get much more aggressive.
