Americans are keeping their cars longer than ever before, but there are a lot of reasons beyond the most obvious one -- high unemployment and the state of the economy. Two significant factors are higher auto durability and longer lease periods. And while auto retention is at a three-year high of 63.9 months, it's unlikely to significantly slow the growth of auto sales in 2011.
That may sound like bad news for the auto industry, because an old car in the driveway is a lost sale. But higher vehicle quality and longevity is also good news for many carmakers (Ford, for instance) that were shedding loyalists but are now rebuilding confidence. And in our increasingly multi-car families, the new car parked next to Old Faithful is quite likely to be the same make.
According to auto information and marketing firm R.L. Polk, new car buyers are on average keeping their cars almost 10 months longer than they did in 2008, and more than 16 months longer than 2001. The chart below shows a straight upward trajectory, with only minor dips and rises for recessions and recovery. Used car retention is up similar amounts.
Full driveways and multi-vehicle households
Lonnie Miller, a Polk vice president, told me in an interview that projected 12.9 million U.S. auto sales for 2011 (up from 11.5 million in 2010) are proof that retention isn't notably affecting sales (though high gas prices might). "A lot of Americans also have multiple vehicles in their driveways," Miller said, "so they can hold on to one and still add sales to the bucket." Multiple car ownership, at 1.9 per household in 1996, is also trending up slowly -- to 2.0 or 2.1 today.
Leasing means quicker vehicle turnover, and reduced leasing rates in 2009 are probably also a factor, as are longer lease periods of up to 72 months.
The better-made automobile
According to George Augustaitis, an analyst at IHS Automotive, today's cars are just better made, so people are keeping them longer. He told me:
It's not uncommon, for instance, to see Toyotas and Hondas from the early 1990s still on the road with 200,000 or 300,000 miles on them. People are holding onto cars longer because they simply built better, and that's reflected in the initial quality data from J.D. Power and others.Carmakers also update styling less frequently, removing one incentive to change vehicles frequently. Through the 1960s, for instance, General Motors introduced dramatically new styling annually.
Augustaitis wonders if modern and complex electronic interfaces will hold up as well as drivetrains. "If you buy a Ford F-350 Super Duty Lariat diesel, the engine may last hundreds of thousands of miles, but what about the touchscreen navigation and the MyFord infotainment system?" he said. Ultimately, though, such systems may be at least partly cloud-based, and updated or repaired via a software download.
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