The scrapping rate fell to its lowest level in two decades as prices for used vehicles hit their highest level.

By Wolf Richter for WOLF STREET.

The average age of all cars and light trucks on the road in 2022 hit a new high of 12.2 years, according to S&P Global Mobility today. The metric tracks the average age of vehicles on the road, not the average length of ownership.

“Average age” is a function of two factors – and we’ll get to that in a moment:

• The number of new vehicles added to the national operating fleet. Strong sales of new vehicles are lowering the average age of the entire fleet; low sales increase the average age.
• The number of older vehicles removed from the fleet through scrapping.

The average age of “trucks” has risen to 13.1 years. “Trucks” is an industry misnomer that includes not only pickup trucks, vans, and truck-like SUVs, but also compact SUVs that look like cars and are smaller than station wagons, and are immensely popular . The average age of “cars” has risen to 11.6 years.

New vehicle sales fell by a total of 5.29 million vehicles in 2019, 2020 and 2021.

New vehicle sales in the United States have been marked by 25 years of stagnation interrupted by sharp declines and recoveries. The peak was reached in 2016, when 17.55 million new vehicles were sold, just a hair above the previous record from the year 2000! Sales started to fall again in 2017, and by 2019 they had fallen to 17.11 million vehicles.

Then came the pandemic in 2020, and vehicle sales plunged. In 2021, demand has returned, but shortages of semiconductors have reduced vehicle production globally, and inventories of new vehicles have disappeared amid strong demand, and prices have soared to the highest high in recorded history, and these supply shortages kept sales at 14.95 million vehicles, about the same as in 1973.

If new vehicle sales in 2019, 2020 and 2021 had been the same each year as in 2018 (17.23 million), then an additional 5.29 million new vehicles would have been added to the national fleet.

And not improving yet: From 2022 to April, new vehicle sales fell 16.6% year-over-year as semiconductor shortages and production issues continue to plague prolong vehicle shortages.

This dramatic slowdown in the number of new vehicles added to the national fleet was partly responsible for the increase in the average age.

One of the reasons for this stagnation in new vehicle sales, despite a growing population, is that vehicles have gotten better, they last longer with fewer problems, and they look better for longer, and so consumers on the whole are driving these vehicles longer before they end up being scrapped.

This process, which has been going on for decades, allows people to drive older vehicles without problems, and they do – and so the average age of vehicles on the road (VIO) has almost doubled, from 6.6 years in 1980 to 12.2 years in 2022.

Less wear and tear: kilometers traveled plunged in 2020:

According to the Federal Highway Administration.

In miles, that drop equated to 325 billion fewer miles driven, which equates to a lot of wear and tear that didn’t happen, and less need to replace vehicles, and less need to send vehicles to breakage. In 2021, miles flown rebounded to 3.23 trillion, but were still below 2018 and 2919 levels:

So scrapping decreased.

In 2021, the number of scrapped vehicles fell to just over 11 million vehicles, representing a scrapping rate of 4.2% of the total VIO, the lowest scrapping rate in two decades , according to S&P Global Mobility. On the other hand, in 2020, more than 15 million vehicles were scrapped, for a scrap rate of 5.6%.

The drop in scrap volume and scrap rate makes sense as the drop in miles driven in 2020 extended the remaining life of vehicles, while retail prices for used vehicles soared by 38% in 2021 and 53% between February 2020 and December 2021. Given the high costs of replacing older vehicles, more of them continued to be driven and repaired, rather than replaced and scrapped .

The national electric vehicle fleet is young and tiny, but growing.

The average age of electric vehicles in service has fallen from 3.9 years to 3.8 years, as sales of new electric vehicles have soared in 2020 and 2021, while sales of internal combustion engine vehicles have fallen . According to S&P Global Mobility, there were 1.44 million electric vehicles in use at the end of 2021, up 40% year-over-year. But in the national fleet as a whole, they still represent only a tiny factor, accounting for around 0.5% of all VIOs.

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