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Consumers Now Holding onto a New Vehicle for 63.9 Months

By November 8, 2010

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Want another sign of the used car apocalypse soon to hit the market? According to a news release from R.L. Polk, "Consumers are now holding onto a new vehicle, on average, for 63.9 months based on second quarter 2010 data, up 4.5 months from the same time last year."

Also, according to Polk, the average length of new vehicle ownership increased an average of 3.7% annually prior to the economic and auto industry meltdown in late 2008. Since that time, average length of ownership of new vehicles has increased more than 14%, with no signs of slowing down.

The release also says, "When considering registrations for used models, average length of ownership also is at a record high - 46.1 months - up from 43.8 months from the same period in 2009. New and used vehicles combined have an average length of ownership of 52.2 months based on second quarter analysis, according to Polk."

Getting the drift of why this is considered another sign of the used car apocalypse? (Maybe I should trademark that phrase.) Consumers are holding on to new cars longer, which means the used car supply isn't being replenished. Combine that with the fact that more people want used cars because of the down economy and the used car supply is shrinking while demand is increasing.

This could also have an effect on the certified pre-owned market because most CPO programs are for used cars 60 months or newer and it appears now that more than half of new cars are being held for longer. That market should not be as affected because leasing is increasing. Cars coming off lease are prime candidates for the certified pre-owned market.

What are your sentiments? Are you holding onto your cars longer? If so, why? Please comment below.


Comments
November 9, 2010 at 12:57 am
(1) sahana says:

Hi.. there are lot of reasons to hold a vehicle. Sometimes it may be considered as a good luck or fortune that turns your life.

November 16, 2010 at 1:07 am
(2) Robert Stinnett says:

I think there are several reasons behind this —

1) The economy — people have finally realized that they don’t need (nor can afford) a new car every 3 years. I think we’ve had a fundamental shift in how people view new car purchases in the past two years;
2) Cars are lasting longer. It used to be 100k was the lifespan of a car; then it was 200k and now many cars, with proper maintenance, can last upwards of 300k and beyond;
3) People are taking care of their cars (which relates to #2). They are realizing that maintenance is important and making sure to take care of things before they turn into costly problems.

November 17, 2010 at 7:35 am
(3) usedcars says:

Robert – as always, you raise interesting comments. Thanks for sharing them. Keith

February 27, 2011 at 11:00 am
(4) todd says:

Hun, so when people make less money, they keep thier things longer. Who would have guessed that.

the last 10 years saw gains for the top 1% (they just about doubled thier income), stagnation for the 1% to 5% crowd, and losses for everybody else.

Thank you trickle down economics.

going back a 10 years… How can you reduce taxes for the rich and then tell everyone else the best thing they can do for the USA is go out and shop.

They gave everybody a $100+ economic stimulus check to stimulate the ecconomy. The thought was the extra money would stimulate spending within the economy. Would it not be more prudent to reduce the tax rate for the poor and middle class so they get taxed $100 less per year? Its the same stimulus amount and it is reaccurring.

30 years of trickle down economics and suprise, the rich are richer, and it did not create any american jobs (altough it may have made some in other contries)

If you want people to buy more, you need to give the poor and middle class more money, as they are more likely to spend it than the rich people.

but what about giving the rich a tax break creates jobs? I would argue that giving the poor more creates jobs. My reasoning is that they will spend the extra money on goods a services that they normally could not afford. These extra purchases create more jobs in the economy since someone has to make, sell, and ship these goods.

February 27, 2011 at 12:17 pm
(5) Steve says:

I have never been rich and I am a debt phobic person. I am now 35 and have had the same car for 10 years. With over 170k in miles I was very happy with it and it is American (Ford).

I thought it would mean I missed out because I didn’t buy the big car, house and spend money like water. I still have two cars (than I own), a modest house I will own by the time I am 40 and have gone to all but two continents. The difference is I now look at my friends who are saddled with debt, kids, house, cars, etc and cannot enjoy life, but are burdened by it and will never retire because they didn’t save. I now see that listening to my grandparents and not my parents was the correct decision, but it still tastes bitter because now I can have all the fun I like, but my friends are all slaves to their choices.

I hope that the next generation as Gordon Gekko called them the NINJA generation learns these lessons well and doesn’t end up like the baby boomers or a good chunk of my generation. I am currently in the middle east and it is sad to see countries with rampant poor, a small ultra rich and unemployment as high as 40%. Maybe little lessons like these will push people to help themselves and live a bit more within their means while still enjoying life.

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