The average age of new cars (passenger cars + light trucks) in the US is almost 13 years old, the highest it’s ever been.
The average length of a new car loan is almost 6 years, the longest it’s ever been.
The average age of new car buyers is almost 53 years old, the highest it’s ever been.
I’m sure these statistics come up from time to time on CNBC or wherever when talking about the state of the economy, but I don’t think a lot of upper-middle-class Americans realize how much owning a reliable, well-maintained and well-repaired vehicle is becoming a luxury.
Younger generations don’t have the “car bug” the way earlier generations did. It’s not too difficult to see why. Part of it is indifference, but there’s a reason for that. They are a significant expense now. That didn’t used to be the case. $100 bought a decent, if not fashionable used car for many years. “Cash for Clunkers” seemed to accelerate this process exponentially.
I used to buy a new car ever 2-3 years when I was working and cars were still in the 20K-30K range. Bought my present car in 2016 and I plan to keep it until I can’t drive any longer. It’s only got about 22K miles on it. I can’t imagine paying what’s being asked now for a vehicle.
Prices of new cars (and, for that matter, used cars) have absolutely gone up dramatically, but there’s another lurking variable in the age of the fleet: much improved reliability and endurance compared to the past.
A few decades ago, a car that was 10+ years old, and/or was over 100K miles, was probably a rolling wreck (especially if it was from an American brand), with rusted body panels and failing components. That’s often not the case now.
We have three cars in our household: they are 19, 15, and 11 years old. We’re not necessarily just hanging onto them because buying a replacement for any of them is prohibitively expensive (though it would be expensive, certainly), but because there’s not a strong reason for us to do so. My Mustang is 15 years old, just rolled 155K miles, and it is still on its original clutch and transmission. I drive it a lot, and it’s never had a significant mechanical failure.
This is is immediately obvious for anyone who spent most of their life without a car in New York and then had to relocate in mid-adulthood to anywhere else in the U.S.
Yeah, I dread the next car we have to buy. Ours are 2008 and 2016 Hondas. Both paid off.
I’ve been saving up for my husband’s next car for years because it could die at any time. We wanted to buy it in cash in full but I don’t know if that will be possible. Even leaving aside the principle cost, these interest rates are just crazy.
My understanding is part of the issue is car makers realize they can make far more profit by selling fewer, high margin cars and less low margin economy cars.
Like the cheap entry level economy subcompact sedans have mostly disappeared. These used to be 15-20k new (hyundai accent, honda fit, toyota yaris, chevy spark, etc etc). The issue is a car manufacturer only makes like 1k in profit for each one they sell.
meanwhile SUVs and pickups that sell for 60k, the car maker can make 6-9k in profit. So they need to sell 6-9 economy cars to make the profits they make on one 60k car. So car manufacturers have pretty much totally abandoned economy cars.
The subcompact economy cars have pretty much all disappeared from teh new market, which means they aren’t in the used market either. The cheapest ones now are compact economy cars I think. The cheapest new cars are closer to 25k.
FWIW I bought my car before covid. It was used and 7 years old. When I go on autotrader and look at the same model of car that is currently used and 7 years old, its about 100-150% more expensive than what I paid pre-covid. The price for the same make/model/years old is double what I paid right before covid.
I remember in the 90s and 2000s when you could buy a fairly reilable used car for a few thousand.
Everything is designed to funnel money upwards to the top 0.1%. Cars, houses, health care.
Which is one of the reasons where the old standby, the Ford Focus, isn’t being sold in the US anymore. The profit margin on one ford pickup or SUV (minus the Maverick, maybe) is huge, the profit on the Focus was minimal. Ford would rather sell 2-3 F150s at 60k+ than four times as many “affordable” vehicles.
The other issues is that the secondary costs of car ownership are huge. Very, VERY little can be easily serviced on a modern car by the home user. So much has to be taken to a dealership (ugh!), or a specialty shop that has the licensed readers for the codes and diagnostics… not to mention the cost of just general repairs is incredible.
With the relative ease and ubiquity of ride sharing options, as well as the huge barrier to ownership in terms of purchase cost, it arguably makes no sense to get a car if you can work from home, walk/bike, or anything else.
COVID really jacked up the price of even used vehicles, and as said in the OP we’re all keeping them longer. My wife and I did in the last few years replace both of ours (a 2024 and a 2025 PHEV), but were trading in a 2002 and a 2007, the 2002 had known issues that would have cost more to repair (again) than it was worth, and the 2007 we sold as a near-charity (Carvana prices) to a co-worker of my wife’s in a cash transaction.
New car sales never recovered from covid. Before covid, it was about 17 million new cars sold a year. Then during covid and in the years after it was about 14 million a year. Its currently at about 16 million a year.
Less new cars are sold now than were being sold in the 2000s, when the US population was about 50 million smaller but about 17 million new cars were being sold each year. As a result of this, the used car market will be tighter and drive up prices.
Yes, that’s in part because cars are so expensive but at the same time, they’re better built than they were before. So they are able to last longer. Rust, for instance, isn’t as much of an issue.
Right, and since individually each one of those improvements are marginal costs, it actually makes sense to the consumer to pay even more.
That is, compared to the '70s, cars have thousands and thousands of dollars in safety and emissions equipment that are now required by law. Before the designers have even penned out a box with wheels, consumers are on the hook for like $5000 in government-mandated goodness (I am not complaining about this, more later). I’d rather my $5000 in mandated goodness be wrapped in a rugged, reliable car that’s going to protect that investment for the next 20-30 years, so I’m willing to pay extra for better engineered and more reliable parts and construction. AND since I’m paying extra so that I can get 20-30 years of reliable service out of the vehicle, I want it to be comfortable for those 20-30 years.
It all snowballs. You could pay $8k for a high-pollution death trap that’s going to fall apart in 7 or 8 years, you could pay $13k for a car that’s safe and clean (and therefore legal) but will fall apart in 7 or 8 years, you could pay $18k for a car that’s safe, clean, legal, and durable, or you could pay $24k for a car that’s safe, clean, legal, durable, and comfortable. Each of those marginal jumps is justifiable as a consumer.
I do think there are lots of people trying to get rich off of soaring car ownership costs (a lot of that is on the finance side), but that’s only a component. Rather than looking at cars as expensive now, maybe it’s better to think of how unreasonably cheap they used to be. We built all this infrastructure around a concept that was only ever going to become more expensive to own. Oops!
But if you look at car ownership by household there has been virtually no change. While people are owning cars longer and paying for them over a longer period of time, very few are giving up cars. And since cars are owned by over 90% of households it is hard to call it a luxury item.
I think this is a really important point that needs to be considered for this discussion. As long as you maintain them (regular oil changes, etc.), modern cars can last a long time, much longer than cars from the 70’s-90’s could. Even in cold climates where there is lots of salt snow and ice, you rarely see modern cars completely rust out like older ones did. Yes, people are keeping cars longer, because they are lasting longer. And prices are going up of course to account for new safety systems and improved quality, so people are taking longer loans to pay them off, generally secure in the knowledge that their new cars will last the length of the loan and beyond.
As well as, as noted above, many manufacturers – particularly the U.S. automakers – have largely or entirely gotten out of the low end of the market, particularly small sedans and coupes.
You can’t buy a Chevrolet today for less than $21,700 (the Trax small SUV); you can’t buy a Ford for less than $28,000 (the Maverick truck). You can’t buy any Chrysler or Dodge products for less than $39,000 (the Dodge Durango SUV).
Particularly if you have to pay for parking, it may be cheaper not to own a car. Purchase cost, financing, insurance, property taxes, maintenance, parking, etc. It all adds up. Renting through a regular rental car company or a short term rental car company like Zipcar might make sense.
Even beaters haven’t cost $100 for way more than 40 years. I got a decidedly beater-ish (rusted out, and with ~75,000 miles) 1976 Suburban in 1991 for around $500, and that was something of a sweetheart deal from my dad’s buddy as it was.