Even before the virus-induced recession, Americans were quickly spiraling down a financial hole with insurmountable debts and no savings. Their ability to afford a home, nevertheless, a vehicle, was becoming harder by the year.
One way to gauge the economic mobility of consumers is to track the average vehicle age of a car, sport utility vehicle, and pickup truck. If the average age is within several years, it would mean there's a high turnover as consumers can swap out older cars for newer ones.
But a new report via Reuters, citing IHS Markit Ltd. data, has made a troubling discovery, indicating the average age of vehicles on US highways has increased to 11.9 years in January, an increase from 11.8 years for the prior year, which is a two-decade high.
Todd Campau, associate director of aftermarket solutions for IHS Markit, said the pandemic crushed the economy and resulted in sharp declines in vehicle sales is likely to lead to the average vehicle age on roads to breach the 12-year level.
"We definitely expect to eclipse the 12-year barrier," he said. People working from home could put fewer miles on vehicles, allowing them to last longer, he said.
Campau said, "average age of cars and light trucks has been increasing steadily for nearly 20 years, reflecting rising prices for new vehicles and improved durability that allows older vehicles to travel more miles with more owners before they are scrapped."
IHS Markit said older cars on roads could be beneficial for repair shops.
But there's a major, as we outlined last week, the virus pandemic has led to "14 million fewer cars" on highways. The ripple effect of older cars and an overall decline in vehicles on roadways suggest America's economy has been shifted into low gear for a couple of years.