US cars are older than ever as driving costs leave savings tanks on empty
This weekend, expect traffic… and lots of Dodge Calibers. As an estimated 38M drivers take to the open road over Memorial Day weekend, the cars they’ll be driving are older than ever. The average age of US cars, trucks, and SUVs hit 12.6 years, new data said. Pandemic supply snags and chip shortages led to rising average vehicle ages in recent years. But this year analysts attribute the bump to higher car prices, insurance premiums, and auto-loan rates.
Vintage is in: The average price to drive a new car off the lot was $48.5K last month, up 21% from April 2021. That’s making potential new car buyers think twice.
Wheel deals: Lower-cost models drove Toyota’s 20% US sales spike in Q1, and an 82% surge in sales of cheaper trucks boosted Ford’s #s.
Fixer-uppers: Older cars on the road = good business for repair shops as maintenance costs rise. O’Reilly last month reported 7% year-over-year revenue growth, and this week AutoZone beat estimates, opening 30+ new US stores last quarter.
Runnin’ on fumes… Owning a car is pricier than ever. AAA said the average annual cost of having a new car hit $12.2K last year, or 16% of the median US household income. US auto-insurance rates spiked 22% last month from a year ago (the highest jump in nearly a half century), and repair costs rose almost 8%. At the same time, automakers are getting rid of more-affordable sedans. GM said it's scrapping the Chevy Malibu and Subaru plans to sunset its Legacy.
Cars are slowing Americans down… They drive more than citizens of any other country. As car costs pile up, folks are finding it harder to save. In March, the personal savings rate fell to 3.2% (the long-term average is more than 8%). Higher driving costs may be one reason consumer sentiment fell to a six-month low (something you may gather from chats around the BBQ this weekend).