Buyers Holding Onto New Cars For Nearly Six Years – Longer Than Ever Before
If you’re still driving that 2006 Ford Fusion you bought new, apparently you are not alone. Automotive data provider Polk says that the average new car buyer is now holding on to his vehicle for a whopping 71 months – almost six years. Used vehicles are being held for over four years, almost 50 months, according to the new study.
Polk based its findings on vehicle registration data through September 2011, concluding that longer warranties, better reliability, and of course, a miserable economy, have contributed to the shift. By comparison, just five years ago Polk showed new car buyers swapping out after just 53 months – a year and a half earlier.
This latest study reflects what we heard from Polk last month, that the average age of vehicles on the road has hit a record high. We might even see consumers further stretch this number, as Polk’s analysts are not forecasting a return to the magic 16-million-units sales level until 2015.
For the carmakers this represents more than just a simple make-your-numbers sales challenge, says Polk, because the longer people keep their vehicles the less brand loyal they become.
U.S. Consumers Hold On to New Vehicles Nearly Six Years, An All-time High
Weak economy, increased vehicle durability both factors, says Polk
SOUTHFIELD, Mich., Feb. 21, 2012 /PRNewswire/ — Based on an analysis of U.S. vehicle registrations by Polk, a leading global market intelligence firm, the average length of ownership of vehicles that were purchased new has risen to a record 71.4 months, or nearly six years (see Table A). For consumers who purchased used vehicles, the average length of ownership is nearly 49.9 months. Combined, new and used vehicle owners are holding on to their vehicles for an average 57 months. For new and used owners combined, the length of vehicle ownership among U.S. consumers has increased 23 percent since the third quarter of 2008, coinciding with the economic downturn.
A number of factors contribute to the increased length of ownership, according to Polk, which analyzed vehicle registration data through Sept. 2011. First, consumer spending remains conservative in a still-weak job market with relatively high unemployment rates. Second, many buyers have longer-term financing options to secure more affordable payments. Third, vehicles produced in recent years have been more durable and more reliable than their predecessors, according to different industry reports. Several manufacturers are also offering longer warranties for new vehicles, reducing the risk for consumers who want to keep vehicles longer.
Polk’s new findings, coupled with the increased average age of vehicles on the road, which now stands at 10.8 years for cars and light trucks combined, offer promise for the automotive aftermarket.
“As the aftermarket prepares to service this aging vehicle population, this creates concerns about appropriate parts inventory,” said Mark Seng, global aftermarket practice leader at Polk. “As a result of our analysis, we’re currently working with customers in the aftermarket to help them prepare for increasing demand throughout the entire supply chain,” he said.
Length of Ownership Trend Expected to Continue
Polk analysts don’t anticipate new vehicle sales will reach pre-downturn levels of 16 million units until 2015 and Polk does not expect to see an immediate decline in the length of ownership trend over the next few years, according to Seng. “Unemployment rates continue to be high, and we expect many consumers will suffer from the lingering effects of the downturn, further contributing to longer ownership trends,” he said.
Earlier Polk analyses also show that new vehicle owners exhibit lower brand loyalty as they retain their cars or trucks longer. This trend demonstrates the importance of targeting potential auto buying consumers at the right time. Leaders involved in new vehicle sales may want to consider tracking the length of ownership trend to determine when their customers are likely to come back. A