Placeholder Image

Subtitles section Play video

  • In 2021, the average age of vehicles on the road in America

  • reached a record 12.1 years. Cars are getting faster, safer,

  • more tech heavy, and the average age of a vehicle in the US is

  • rising.

  • It has been increasing for really ever since we've been

  • recording it.

  • Two big reasons for this say industry analysts cars have been

  • growing more durable and more expensive. Drivers are holding

  • on to their cars longer and cars are spending more time in the

  • used vehicle market before they head to the junkyard.

  • I have a 1993 80-series Land Cruiser that I bought brand new

  • 28 years ago and it has 215,000 miles on it and the engines

  • never been apart. I have serviced the vehicle regularly

  • and faithfully

  • Many buyers especially those with less money to spend are

  • seeking out used vehicles as new vehicle prices climb.

  • There is some concern that this is going to reduce the churn

  • rate or the number of folks that are going to be buying a new

  • vehicle.

  • So far though, plenty of Americans seem to be buying new

  • cars. New vehicle sales reached a record high of 17.5 million in

  • 2016. And the number of vehicles per household has gradually

  • increased over time even as vehicle age has risen. But every

  • driver that chooses to hold on to a car for another year is

  • postponing a trip to the dealership and some industry

  • analysts wonder if rising vehicle ages and prices indicate

  • trouble for new car sales in the future. Automakers are stuffing

  • cars with new technology and improvements, but will that be

  • enough to keep buyers wanting the latest and greatest.

  • In the 1970s, a car would be expected to last at most 100,000

  • miles. At that time vehicles had five digit odometers so the

  • typical odometer only went up to 99,999 miles. But now it is

  • typical for cars to last well over 100,000 miles and many will

  • make it to 200,000 or more. 25% of the cars on the road in the

  • US are at least 16 years old. There are some cars that last an

  • especially long time iSeeCars a search engine for car shoppers

  • publishes a list of the longest lasting vehicles and brands on

  • the road. In order to make the list at least 2.5% of the cars

  • with a certain nameplate have to make it to the 200,000 mile mark

  • about 1% of the average vehicle model well make it past 200,000

  • miles. But some models are disproportionately represented

  • among higher mileage vehicles, SUVs and trucks from Toyota,

  • Honda, and General Motors. The Toyota Land Cruiser a favorite

  • vehicle of offroaders United Nations forces and wealthy SUV

  • buyers tops the list. More than 16% of Land Cruisers on the road

  • have at least 200,000 miles on the odometer. It is followed by

  • another large Toyota SUV, the Sequoia.

  • Then when you go to the third vehicle, which is the Chevrolet

  • Suburban, you're now at 5%. So the first vehicle on the list

  • has three times the percentage of models with 200,000 plus

  • miles versus the third vehicle on the list showing how A)

  • quickly it drops from the first few vehicles on the list and B)

  • how truly unique and capable and durable the Toyota LandCruiser

  • is. It really stands out even among this group.

  • Toyota especially has a reputation for making cars that

  • last a very, very long time.

  • We have 100 vehicles on display right now in the building and

  • quite a few of them have an awful lot of miles on them, over

  • 200,000 miles 300,000 miles. We have one Japanese market Land

  • Cruiser Prado that was a highway service vehicle and it has over

  • 420,000 miles on it with the original engine in the frame and

  • it runs beautifully.

  • One Toyota owner's full size Tundra pickup lasted for more

  • than a million miles for example, the automaker bought

  • the truck back and gave the owner a new one.

  • It's pretty clear that Toyotas have not just a reputation for

  • durability, but a proven track record of durability just just

  • by glancing at this list. Typically the cars on this list

  • especially at the top of the list are body on frame cars you

  • see a lot of body on frame vehicles here and you see a lot

  • of Toyotas. Of course the Land Cruiser is both it's a body on

  • frame Toyota, and the next vehicle on the list the Toyota

  • Sequoia is a body on frame Toyota.

  • Consumer Reports also publishes a list of 10 cars it says are

  • most likely to make it to the 200,000 mile mark and it is

  • populated entirely with Toyotas and Hondas. It is important to

  • note that just because a car is not on the iSeeCars list doesn't

  • mean it is not reliable. Porsche for example, has a strong

  • reputation for reliability, but might not make it onto a list

  • like this because Porsche owners often drive their cars

  • conservatively to keep mileage low. In addition to being more

  • durable cars are also becoming more expensive. In December

  • 2020, the average price of a new vehicle in America reached a

  • record $38,000. Average new vehicle prices have been

  • bouncing around the mid $30,000 range for several years. As this

  • has happened, automakers have also appeared to trim their

  • portfolios of lower priced vehicles. In 2013, sales of cars

  • costing less than $20,000 made up 20.1% of total annual new car

  • sales. By 2020, that figure was 9.4%. Customers who are priced

  • out of buying new cars are likely to turn more and more to

  • use vehicles. But many owners are simply foregoing car

  • purchases altogether preferring to hold on to their cars for

  • another year or two.

  • Part of what makes it easier to hold on to vehicles longer is

  • the availability of parts of the internet even for obscure or old

  • cars. There are opportunities for shops even dealers to

  • provide services to cost conscious car owners looking to

  • delay the purchase of a new vehicle.

  • Fix operations of repair and servicing of vehicles is gonna

  • be an important part of dealers operations, and probably a

  • growing more important part of dealer operations. Because all

  • of these vehicles are going to need repairs. If you're going to

  • have a vehicle for 10 years or longer, you're probably going to

  • be visiting your car dealer more and more to try and repair all

  • the little issues that may pop up on that vehicle.

  • Outside of the vintage or classic car markets, consumers

  • might not be used to thinking of their cars as investments after

  • all cars are typically depreciating assets. But the

  • sheer cost of buying a new vehicle might make it more

  • appealing for consumers to put money into the cars they already

  • own. Even making major changes like swapping in a new engine.

  • So these trends could mean less demand for the new cars that

  • roll off assembly lines every year. So far, demand for new

  • vehicles hasn't waned, despite the rising age.

  • You think average age would lower the number of

  • opportunities for sales. But it doesn't seem to have done that.

  • It's been good news across the board for new vehicle dealers

  • used dealers and the service channel as well.

  • And there are reasons to think plenty of buyers will still want

  • the latest and greatest in new technology and features.

  • Lots of folks out there don't want to own a vehicle for 10

  • years, they want to keep a new vehicle around, they don't like

  • getting over a certain amount of mileage. And so those folks come

  • back to the market every three, five years, much more

  • frequently.

  • Automakers have a number of levers they can pull to induce a

  • customer to swap out their current vehicle for a new one.

  • New safety systems, better fuel economy, infotainment features,

  • cameras, and sensors can all entice buyers

  • Just like the iPhone 10 has to be substantially better than the

  • iPhone 9 for anybody to want to shell out another $1,000 to get

  • the latest and greatest much is the same in the new vehicle

  • market as well as in the used vehicle market. But that new

  • vehicle has to be substantially different than its used

  • counterpart, because folks are able to buy that use vehicle for

  • a substantial savings off the new vehicle price.

  • Automakers have always freshened their products from year to

  • year, but the pace at which they're doing so seems to be

  • accelerating.

  • The industry is finding that there's a lot of technology to

  • add on these vehicles. So the pace of of new components, new

  • capabilities, is constantly improving as well. And all of

  • that makes the vehicle market a much more rapidly changing

  • industry than it was just a few years ago.

  • There are a few short term reasons to think Americans might

  • hold on to their vehicles a bit longer.

  • The way people interact with their cars may be changing.

  • People staying at home more often for work than they have in

  • the past may actually cause people to consider if they need

  • that additional vehicle or if maybe we might actually see a

  • catalysts on the horizon for that approach to maybe reverse a

  • little bit where people decide they don't need quite as many

  • vehicles or maybe they want different vehicles for more

  • recreational purposes.

  • New vehicle sales hit a historic high of 17.5 million units in

  • 2016. Since then they have been falling. Vehicle sales in 2020

  • were an especially low 14 million due to lock downs,

  • production stops, and shortages of critical supplies such as

  • microchips. That means there is a smaller supply of both new and

  • new-ish used vehicles coming into the market, including

  • expired leases, or cars tossed from rental fleets. But there is

  • another change coming, the rise of the electric vehicle.

  • Technology is changing so quickly that an EV made one year

  • might be pretty obsolete in a very short time. Consider how

  • much electric vehicle ranges have risen in the last several

  • years.

  • There's products out there right now that only have a range of

  • 150 miles. Future products are suggesting they're going to have

  • ranges above 400 miles.

  • The upside is that it might bring more customers into the

  • market more frequently. The challenge is figuring out what

  • the residual values of EVs will be. It also might make customers

  • skittish to buy an electric vehicle in the first place.

  • If you bought an iPhone 5 Are you willing to sit with that

  • iPhone for 10 years till the iPhone 15 comes out. God knows

  • all of the capabilities that you'd be missing out on from

  • sticking to this technology at an early stage. Well, that's

  • what we're asking electric vehicle buyers to do. The

  • technology is still moving very quickly.

  • Nearly every major automaker is pursuing an EV strategy. But the

  • very rapid change and the pace of technological development

  • poses questions of vehicle value for dealers, banks, and

  • customers.

  • What is the value of a vehicle that gets half the range of a

  • new product that's coming out. And I think this is one of the

  • issues that the industry is struggling with. These retention

  • values are an important part of the industry, especially for the

  • financing side. Because the lending companies can't really

  • lease to a vehicle if they don't know what the residual values

  • are. Lenders may be reluctant to loan money to you if you're

  • going to buy a vehicle if they don't know what these values

  • are. So all of that can be very disruptive to the purchasing

  • side of the industry. And yet, with so much volatility in the

  • technology and development that's going on a daily basis,

  • it's going to be a moving target to try and estimate what these

  • retention values really are.

  • One solution for this says Chesbrough is vehicle

  • subscriptions, an idea that has been delved into a bit but not

  • yet fully explored. Subscription plans vary, but overall are

  • similar to leases with some important differences. They are

  • often more inclusive of the total cost of ownership. For

  • example, many subscription plans come with registration,

  • insurance, and maintenance costs bundled into the fee, so owners

  • don't have to account for those separately. Subscription plans

  • also allow customers to swap out one vehicle for another, for

  • example, a newer or different model as the customer's needs

  • change. Plans like these might allow buyers to sample new

  • vehicles such as electric cars without worrying that their

  • investment might be a bad one. And it might enable a car with

  • rapidly obsolescing technology to stay on the road a bit

  • longer. The European Union has said it plans to start phasing

  • out the sale of new internal combustion vehicles by 2035. New

  • York and California have recently set similar targets.

  • Higher fuel prices or fees such as a gas guzzler tax on

  • especially thirsty vehicles may turn consumers away from gas

  • cars shortening their usable lives.

  • The Covid 19 pandemic has changed what kinds of cars

  • people are buying. Sales of RVs and vehicles such as ATVs, and

  • dirt bikes have shot up and the transition away from passenger

  • cars and toward light trucks has quickened. These are signs

  • buyers are rethinking what kinds of cars they want to own,

  • especially as they continue to face the possibility of working

  • from home for a time. Others may simply be sitting on the

  • sidelines altogether, waiting to see what the future holds in

  • terms of new technology and their own needs. Millions of

  • Americans every year decide they want to plunk down the cash for

  • a brand new car but for many others there is nothing like

  • driving around a beloved old one.

In 2021, the average age of vehicles on the road in America

Subtitles and vocabulary

Operation of videos Adjust the video here to display the subtitles

B1 US vehicle toyota list technology cruiser electric vehicle

Why The American Car Fleet Is Getting So Old

  • 38 3
    moge0072008 posted on 2021/10/29
Video vocabulary