With the average U.S. vehicle age already at a record high as more people bought used cars due to constrained supply chains and resulting high prices.
IMAGE: Pexels/Andrea Piacquadio
Market shifts related to pandemic-era scarcity of new vehicles could benefit service departments as used models get older, according to projections by S&P Mobility.
With the average U.S. vehicle age already at a record high as more people bought used cars due to constrained supply chains and resulting high prices, the recovery of inventory could nevertheless fail to reverse that trend, S&P says, as demand weakens due to high interest rates and inflation.
The number of models between 6 and 11 years old has ballooned since Covid struck, S&P says. It says that those 12 and 13 years old are now growing, too, though they were picked up during the slow years of the Great Recession, it points out.
The report indicates that the share of 7-year-old vehicles should fall through 2028 while those older than 8 will surge by more than 25 million by that time, S&P’s Associate Director of Aftermarket Solutions Todd Campau said in a press release.
The increasing use of technical electronics in vehicles will factor largely in resulting service growth, Campau said.
“As vehicles with more electronic sophistication continue to age and increase in overall share, the aftermarket’s role in maintaining the aging vehicle fleet will become increasingly critical. That’s where the real opportunity is in the aftermarket space.”
The report says vehicles 6 to 13 are the new “after-market sweet spot” and that they’ll increase their share of annual miles traveled, outpacing new- to 5-year-old models and those 14 and older.
Campau says the question now is whether automaker will produce more less expensive models to compensate.
“Will the consumers continue to support that premium model? The question is who’s going to blink first?”
