The stock of US passenger vehicles can be expected to get significantly older and will likely increase at the rate of population growth in the near term (meaning the next five to ten years). Saturation of the market, stagnant vehicle usage, consumer economic problems, and the high cost of new vehicles are factors that will contribute to this result.
There were roughly 247 million registered autos and trucks in the US in 2007 according to DOT data.(1) The same source showed that in 2003 there were 1.2 vehicles for each licensed driver. The following chart from the Federal Highway Administration shows the trend in the size of the vehicle stock since 1970(2):
The number of autos has remained approximately the same for the twenty two years between 1985 and 2007while the number of trucks has increased significantly, based on this chart and data for the post 2000 period from the Department of Transportation(3). There are significantly more vehicles than there are licensed drivers. This would indicate a saturated market for cars and trucks. It seems likely that increases in the stock of vehicles will correspond with population growth at best.
Next, a chart (also from the FHA) of annual vehicle sales between 1970 and 2000 shows that sales of cars appear to have been essentially replacing those that are scrapped, while truck sales have been increasing, leading to the significant increase in the truck stock illustrated in the previous chart and the increase in the overall stock.
A chart from Calculated Risk that overlaps with the above data(4) shows that overall sales in the last decade were flat until 2008 when the sales rate plunged:
The next chart shows the mean age of trucks and autos:
The steady increase in mean age of autos reflects increased durability and postponement of auto replacement purchases by consumers. A recent private study of vehicle ages found that the mean for cars in 2008 was 9.4 years. (4)The fact that the mean for autos has surpassed that for trucks is partly due to the significant increase in truck sales in recent years leading to a large proportion of late model trucks in the total. Given the vehicle stock of 247 million units cited above and assuming a 9 year replacement cycle gives a rate of annual sales of 27 million units. More reasonably, an annual sales rate of 15 million units results in a time period of roughly 15 years to replace the vehicle stock. We can expect to see a continuing steady increase in the mean age of US vehicles.
Federal data shows that vehicle miles traveled in the US has remained stagnant for some time. Recently Calculated Risk posted a chart of this measurement:
Consumers are likely to put off purchases of new autos when there is uncertainty about employment and household finances. Also, since long term (72 months, for example) financing for new vehicle purchases is generally available, consumers with long term loans existing on their existing vehicle aren’t likely to purchase again until the outstanding loan is largely paid down.
High prices for new vehicles provide an incentive for consumers to maximize the length of time they keep vehicles, and provide an incentive for consumers to purchase used vehicles as replacements rather than new vehicles. Business or commercial purchasers are likely to be somewhat less price sensitive, as the purchase price of vehicles is tax deductible and vehicles tend to form a small fraction of fixed costs or overhead. Commercial vehicle owners are likely to dispose of these vehicles when they are fully depreciated and thereby provide a source of used cars for the consumer market.