2023-05-20 19:09:02
Given the high prices of new and used cars, Ryan Holdsworth says his plan is to keep his nine-year-old Chevy Cruze for at least four more years. Lowering his payments and debt in general is more important to him than having a new vehicle.
The 35-year-old grocery store clerk says he would buy a new vehicle every few years if it weren’t for the prices. For now, don’t even think about it. “You don’t get it at an affordable price,” he alleges.
Holdsworth is far from the only one who thinks so. Americans are keeping their cars longer than ever. This year the average age of a passenger vehicle on the road rose to 12.5 years, a record, according to S&P Global Mobility. Sedans like Holdsworth’s are even older: 13.6 years on average.
The main blame lies with the pandemic, which in 2020 led to a global shortage of microchips for automotive computers, the main component that controls everything from the radio to the throttle and transmission. The shortages caused a drastic slowdown in global assembly lines, and vehicles became scarce just when consumers were eager to buy.
Prices have reached record highs, and while they’re down a bit, the cost of the vehicle is too high for many Americans, especially now that interest rates on loans are so much higher.
Since the start of the pandemic three years ago, the median new vehicle price had risen 24% to nearly $48,000 in April, according to Edmunds.com. Interest rates on new car loans have been raised to 7% as a result of the policy of aggressively raising rates to combat inflation.
With all this, the average monthly payment for a car loan has risen to $729, a prohibitive cost for many. Experts say a middle-income family can no longer afford a new car and cover basic costs like housing, food and utilities.
The median price of used vehicles has increased even more since the pandemic, by 40% to nearly $29,000. Added to this, the average rate on a loan, at 11%, makes the typical monthly payment for a used car $563.
Faced with the decision between paying similar prices or keeping their current vehicle, more and more are opting for the latter, even if it increases repair and maintenance costs.
Auto mechanics watch in amazement at the increasing age and mileage of vehicles arriving at their shops in unprecedented numbers.
“You see cars with 250,000, 300,000 miles (400,000 to 480,000 kilometers),” says Jay Nuber, owner of Japanese Auto Professional Service, a repair shop in Ann Arbor, Michigan. “They don’t need a lot of work. They only come for “routine” maintenance, he adds.
This doesn’t mean that most older vehicle owners necessarily have to pay for constant repairs. One of the reasons people are able to keep their vehicles longer is that manufacturing has improved over time. Engines last longer. The bodies do not rust as quickly. The components are more durable.
In any case, the price of a new or used car is such that more and more people have no alternative but to keep their vehicle.
“The repair-versus-buy equation has changed,” says Todd Campau, an S&P manager. Even as repair costs rise, it’s often cheaper to repair an old vehicle than shell out money for a new one, he adds.
The average age of vehicles, which has increased since 2019, accelerated this year by three months. And while 12.5 years is the average, Campau says, more and more vehicles are on the road for 20 years or more, sometimes with three or four successive owners.
In these cases, the third or fourth owner buys a car that is much older than the one they would have previously purchased. Almost 122 million vehicles in circulation are over 12 years old, says Campau. S&P forecasts that the number of used vehicles on the road in the United States will continue to increase through at least 2028.
Although the vehicles are more durable, all this has generated a boom for mechanical workshops. Over the past year, Nuber’s Japanese Auto has been overwhelmed with clientele.
It took up to three weeks to get an appointment, whether it was for repairs or the routine maintenance older cars require. “The phone wouldn’t stop ringing and the cars wouldn’t stop coming,” says Nuber.
It has reached the point where some owners must decide whether to pay for a repair that is greater than the value of their vehicle. That’s where many decide to change it, says Dave Weber, manager of Japanese Auto.
Recently, Weber says, a customer needed rear brake, wheel bearing and exhaust system parts. The customer decided to do half of the repairs and then decide if he would spend more money on an aging vehicle.
“They patch them up and wear them for as long as it takes until the next big repair,” Weber adds.
S&P forecasts that 14.5 million new vehicles will be sold this year in the United States, compared with 13.9 million last year. One of the reasons is that the offer in the dealerships has increased again. Manufacturers have begun to restore some discounts that have long helped limit price increases. That is why many people in a position to buy can do so. It’s a trend that could slow the aging of the US car fleet and boost sales.
Still, no one forecasts a return anywhere near pre-pandemic sales of 17 million new cars a year. Despite the discounts, new vehicle prices will likely be much higher than they were before the pandemic for several years.
As for Holdsworth, the owner of the Chevy Cruze, his plan is to continue with routine maintenance, particularly the oil change. And if he had a major repair to do, he’d probably do it.
Having purchased your vehicle two years ago, you have about two years of payments left to pay. So his Cruze will likely hit the national average of 12.5 years. “I’ll finish paying it off and keep using it for another couple of years,” he says.
1684629589
#Americans #keeping #cars #longer #due #high #prices #Daily #Listin