Tired of your old car yet?
Detroit and the rest of the auto industry sure hope so, because the age of the average car on American roads is now at an all-time record, close to 11 years old, according to the latest statistics from the R.L. Polk Co.
In a way, the auto industry is a victim of its own success: cars just don't break down as often or wear out as fast as they used to. People have discovered they really don't need a new car every three or four years.
Meanwhile, the average trade-in at new-car dealerships is now 6.5 years old, one year older than the average in 2007, according to the Power Information Network, a unit of J.D. Power and Associates.
The fact that cars are lasting longer didn't really sink in at first, because new cars were so cheap, and credit was so easy. American consumers replaced cars far more often than necessary. After all, Baby Boomers and older generations are conditioned to think that cars start to fall apart after four or five years.
That attitude helped feed a boom in leasing in the 1990s and early 2000s. In leasing, the customer only borrows the difference between the upfront cost and the residual value, what the car will be worth at the end of the lease. That way, people can take home more car for the same monthly payment. The downside is, the car is never paid off. Before the recession, leasing helped the U.S. auto industry persuade itself that annual sales of at least 16 million cars and trucks were the "new normal."
Then reality hit the fan. New-car sales fell sharply in 2008 and 2009. U.S. new-car sales fell around 3 million units, from 16.2 million in 2007 to 13.2 million in 2008, according to AutoData Corp.; then fell another 2.8 million, to only 10.4 million in 2009. General Motors and Chrysler fell into bankruptcy. Ford also restructured itself, although it avoided bankruptcy.
With close to 6 million fewer new cars on the road, the average age of cars on the road climbed. New-car sales staggered back to about 11.6 million in 2010, and 12.8 million in 2001, still anemic by recent standards. Polk said there are now 240.5 million cars and trucks on the road in the United States, down from 242.1 million in 2008.
True, the Detroit car companies are so much smaller and more efficient today that they are profitable at a much lower level of sales. They're not expecting sales of 16 million units a year again any time soon.However, they're really, really, ready for you to replace that 11-year-old car in the driveway.