Off-Lease Consumers Add Fuel To New-Vehicle Demand

I still don't see HOW we sell so many brand new cars every year, when we have a very high average age of car on the road (11 years or what have you). People aren't dumping these old cars, they're still driving them. Where are all the new cars going?! Are they parked next to the older cars in the garage, and people are car hoarding?

@Corey Lewis There are 254 million registered passenger vehicles in the US. If the number remains stable then for every new car sold - one is getting junked. 2008 - 254,403,081 2009 - 255,917,664 2010 - 254,212,610 2011 - 250,070,048 2012 - 253,108,389 http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_01_11.html

@jmo That makes sense, guess I don't consider all the stuff 10-15 years + which gets junked.

@Corey Lewis Pretending that yearly sales are flat for the sake of a simple example, keeping up that 11 year average would mean dumping them at 22. How many 1991-92 models do you see out there?

@Corey That's the new trend, the avg life expectancy of a cheap car produced in the early/mid 90s was around 10 years. When we started getting in well worn early to mid 90s stuff in 04/05, it could be made to keep going but aside from outliers like LS400, Legend, etc and "nicer stuff" people kept going (Town Cars, C-body Cadillac), many of the cars were well into beater status. The economy wasn't as bad as people remember in the mid 00s and lots of folks didn't opt to keep their beater grade cars going, but now they do. Used valuation was also so much lower and thus even for folks like me going from complete beater to 5-7yo car, the 5-7yo car was much cheaper than it is today. One of the wholesalers I knew got a batch of cars in right after I left the business in summer 2006 and my gf at the time needed a car. Three S-series Saturns 96-98, 60-70K and an 02 Grand Am/94K. He was going to "hook me up" with the G/A for 4 and the Saturns for 2 and change apiece if she wanted them (she did not). I found out later from his partner they had about 2500 in the high miles G/A (a FOUR year old car at the time) and about $800 apiece in the 8-10yo cleaner Saturns. Try doing that today.

@Dan Those models were not designed for a 20yo life expectancy, also emissions zealots in gov't intentionally have removed many more which could still in theory be running. Additional: I had a '90 Town Car till 2010, a '90 Audi 100 till 2011 and presently own a '93 Volvo 240.

@jmo Good figures.

"This is good news for wholesale as supply should slowly start to creep up over the next few years and in theory some values return closer to reality." High values are reality. YOu may not like it or agree with it, but it is reality. Just trying to quibble.

@Corey Lewis Part of this is that there's a hole in the car population for the worst years of the Great Recession. I suspect that's keeping some older cars on the road, plus it skews the average age as the number of 3 - 6 year old cars is depressed. I've always wondered about that average car age as well. I read another statistic that said that cars are an average of 19 years old when junked. That strikes me as a bit high. A 19 year old car driven 12,000 miles a year would have 228,000 miles, while one driven 15 years would have 285,000 miles, which seems a little high. It makes me think that there are a fair number of older cars that don't make it to the scrapper for a year or two after they stop being driven.

@jjster6 Not necessarily as valuation takes many factors into account including region. Another big factor is financing, once something gets too old and banks stop wanting to finance it the artificial wholesale value will decline.

@FormerFF You have a great point on the "hole". High point of production was CY2007 with just over 17 million units for N.A. I think it dipped as low as 9 1/2 million in CY2008-09 and I think only started to recover in CY2012 with around 12 million units. I was surprised even last year when 2012 figures were so high, as I predicted a ten year production depression ending around 2017.

@28-Cars-Later I think this is part of the answer, you have several (four?) cars, I have three, had four until not too long ago. Two+ cars per driver is not that uncommon

I can't speak to the first two, but "quality control" is starting to look more like "kwality kontrol" since the mid 90s. Just look at the figures from 1994 on alone: Ok... 1994: 6,202,000 then oops: 1995: 18,121,000 then worse: 2000: 24,646,000 still bad: 2003: 19,098,000 Ok we got it: 2008: 8,600,000 Nope, we don't got it: 2010: 20,000,000 Now add even more complex systems to the mix since we can't even get simpler cars correct. http://www.statisticbrain.com/automobile-recall-statistics/ https://autos.yahoo.com/news/top-10-biggest-recalls-of-2013-174809182.html

Same time as alchemy.

@28-Cars-Later Recalls? That a pretty poor metric. Repair trips at 5 years is a pretty good metric and that has all declined significantly over the past 20 years. When the LS400 came out in 1989 it rocked the quality world with 0.89 trips per year. Now, some cars are 0.20.

@jmo You cited manufacturing quality control, and while recalls are valid I agree they are not the only metric. You mention trips, I assume you refer to unscheduled trips since no link or reference was cited. What about scheduled trips over the first 100K, i.e. the maintenance cited in the owners manual? Has mfg maintenance gone down, up, or remained constant since 1995? If you argue I can buy a car new and only spent 0.20 unscheduled trips per year in a 5year/10K period I might believe it, but product quality doesn't end with the lease or first owner trade, its for the life of the product. also on recalls: http://www.thetruthaboutcars.com/2014/04/new-or-used-more-troubles-with-old-gm/#comment-3066529

@28-Cars-Later So, your theory is that a new car (say a Civic) has say 1/5 as many unscheduled repair stops from 0-5 years 0 - 60k miles but the number of repair visits increases dramatically over say 150k miles vs. a 1994 Civic?

@28-Cars-Later Recalls are as much about politics as they are about quality. And as platform and parts sharing becomes more widespread, recalls become bigger as the same part is used in more vehicles. And ultimately, I don't care about recalls because they don't cost me anything. On average, cars are FAR more reliable than they have ever been. Some are far, far, far better, some are not quite as good, but the average is way, way, way up. Heck, my 2013 Fiat, long the butt of so many jokes, has had ZERO, zip, nada, none, no issues in its first year. Not a single one. Can't say that about any other car I have ever owned, new or used.

@28-Cars-Later Yes that's my general frame of mind. If people assume the product's life cycle is 20year/200K, I am interested more in the whole picture vs the initial warranty period. The last batch of 10-15yo product was a vast improvement over its 90s predecessors in terms of TCO inc overall longevity. I'm a little bearish about the future batch.