New research from IHS Markit shows that the median age of light vehicles in operation (VIO) in the US has increased to 12.1 years this year, increased by nearly two months in 2020, and increased by the COVID-19 pandemic . The increase in the average age will further increase the possibilities of vehicle maintenance due to an aging vehicle fleet.

COVID-19 and its impact in the US resulted in a sharp drop in new car sales and a sudden increase in vehicle scrapping, which was a catalyst for an accelerated increase in the average age of passenger cars. The pandemic-induced increase in the average age is expected to be short-lived as there will be a return in new vehicle registrations and increased activity in used registrations in 2021 as people adjust to post-pandemic norms.

Pandemic kept people indoors and parked vehicles

In early 2020, the pandemic put significant pressure on new car sales as dealerships worked to implement modified sales processes and deliveries to comply with social distancing guidelines and create a more comfortable vehicle buying experience for consumers, even postponing some transactions online. A strong close to 2020 demonstrated the resilience of new registrations as over 8 million new vehicles were registered in the second half of the year, bringing new registrations to 5.1% of the VIO for the year as a whole.

While new car sales proved resilient, the strongest impact of the pandemic on VIO was felt in the scrapping rate and vehicle kilometers driven. Scrapping, the measure of vehicles leaving the workforce, recorded the highest volume in two decades at over 15 million units and the second highest rate at 5.6% of the VIO. Vehicle miles traveled decreased over 13% year over year in 2020 due to bans and work from home policies. Normally, an increase in the scrapping rate would be a headwind for the average age, but coupled with lower new car sales and fewer kilometers driven, the combined effect turned out to be a tailwind.

“2020 was a radical departure from the norm and challenged assumptions about how vehicle owners use their vehicles and earn miles. From a vehicle fleet perspective, one of the real surprises was the number of vehicles that suddenly dropped out of the active population, ”said Todd Campau, Associate Director Aftermarket Solutions at IHS Markit.

According to the analysis, the rate and mix of vehicles leaving the population suggests the possibility of volume being inflated due to a larger percentage of vehicles that may not have been admitted due to delays in government renewal requirements of COVID-19 restrictions “stored” at many locations and home office initiatives.

Chip shortages and used car sales shape the average age in 2021

2021 offers two related factors that are expected to dampen average age growth, according to IHS Markit analysis. The ongoing microchip shortage is expected to continue challenging new vehicle production volumes through the fourth quarter of 2021, but by the end of the year, IHS Markit expects sales of 16.8 million U.S. light vehicles according to current forecasts, which is expected to dampen average age growth. Additionally, during the height of the pandemic, some vehicle owners may have had their registrations forfeited because their vehicles were not driven.

“The shortage of microchips and the resulting inventory of new vehicles has created a situation where used car values ​​have become extremely high, so a vehicle owner who may have kept a vehicle in the garage that they didn’t use in 2020 will be leaving instead can benefit from the ability to either reduce the number of vehicles in their garage or swap them for something newer while the demand and value of their used vehicle is extremely high, ”said Campau. “This is great news for the aftermarket, as subsequent vehicle owners are typically more inclined to use independent workshops for necessary maintenance and repairs.”

VIO decrease in 2021 to 279 million; Electric vehicles in operation are approaching 1 million

The combined effects of the factors in 2020 resulted in the first drop in VIO since 2012, with 279 million vehicles in service in January 2021, up from nearly 281 million the previous year. However, the industry is entering a phase of strong growth in the aftermarket “sweet spot” – these vehicles between the ages of 6 and 11 – as record sales years will pass over the next five years in this age group, which will serve as a tailwind for sales growth in the aftermarket.

In addition, the number of EVs with strong registrations continued to grow through 2020, bringing the total number of EVs in service to nearly 1 million units. The average age of electric vehicles in the US is 3.9 years and has been between 3.8 and 4.1 years since 2016, as the volume of new registrations of electric vehicles continues to make up a large proportion of the total EV VIO. Eighty-nine percent of 2016-2020 model years electric vehicles are still registered by their first owner, compared to 68% of gasoline vehicles for the same model years. As electric vehicles begin to gain more market share and become more prominent in the used car market, their average age is expected to increase. At this point in time, repair options in the aftermarket will shift in response to the increased market share of electric vehicles.