I thought owning a 10 year old car was a great financial achievement. It represented frugality, discipline, and gratitude for what one had.
However, the latest average age of U.S. cars is S&P 500 Global Mobility According to the report, Americans own or buy older cars on average for far longer than a decade.
By 2023, the average age of a U.S. passenger car will be 13.6 years, and the average age of a U.S. light truck will be 11.8 years.The overall average for US vehicles is astonishing 12.4 years!
Desire to drive a car longer than average
In Financial Samurai, if you want to build more wealth than the average person, you need to be more financially responsible than the average person.
Instead of saving up to 5% of our income like the average American, we save at least 20% of our income. Earn extra money with a side job instead of relying solely on one job.
Given this desire to outperform, you should aim to drive your car longer than the US average of 12.4 years. Spending a lot of money on a car is one of the biggest wastes of money in this country. Moreover, buying new cars too often is also a problem.
We know that the average price of a new car is almost $50,000, an unreasonable amount considering the median household income is only about $75,000. We also know that the median retirement savings balance in America is only about $110,000. The money we spend on cars could be invested in retirement instead.
Given that the average age of cars in the US has risen to 12.4 years, improving performance will require cars to be in operation for at least 13 years. As long as the car is properly maintained and safe, it seems reasonable to drive it for 15 years.
Why is the average age of cars aging in America?
Several factors are likely responsible for the increase in average vehicle age in the United States.
1) Improvement of vehicle quality
Today’s vehicles are generally built using higher quality materials and components than in decades past. Advances in manufacturing and engineering have made vehicles more durable and longer lasting. As a result, vehicles remain reliable and functional over time, leading to an increase in average service life.
The Volvo 850 GLT, BMW M3 and MB G500 I owned in the 2000’s all had many electrical and mechanical issues. Their problem is why I befriended the mechanic.
2) Economic factors
New car prices are steadily rising, making new car purchases more expensive for many. As a result, people are choosing maintenance and repairs instead of buying new cars, and owning their cars longer.
Both used and new car prices have skyrocketed during the pandemic. In some cases, he could have bought a new car and sold it for the same price three years later.
3) Financing and Leasing Options
The availability of financing and leasing options has allowed people to spread the cost of a new car over time. This has led individuals to keep their vehicles longer as they continue to pay for them beyond the normal ownership period.
This kind of financial engineering can be dangerous for consumers as it allows them to buy more cars than they can afford. The same thing happened with the housing market, which crashed from 2007 to 2009.
4) Improving technology and functionality
Modern vehicles are equipped with advanced technology and features such as improved safety systems, infotainment options and fuel efficiency. As a result, the gradual features of the new car are less impactful.
I can still remember the excitement of inserting a CD into the dashboard and playing music using Bluetooth. Almost every car now comes standard with Bluetooth. The same goes for the rear camera.
5) Reliability and maintainability
With regular maintenance and proper care, the vehicle can easily reach 200,000 miles if desired. If the average person drives 12,000 miles a year, he will own the car for 16.7 years. Repairing a car is usually the more economical option.
The average age of cars may also be rising as the mass market awaits increased reliability of electric vehicles. Personally, I’ve been considering buying an EV since 2020. But waiting each year means better battery technology, more charging stations, and more reliable vehicles.
Discussions about safe car driving
After my son was born, one of the financial moves I made to reduce stress was buying a bigger car. As a new father, my desire to protect and provide for my family has grown. Owning a compact car with paper-thin doors no longer worked.
My Range Rover Sport was born in July 2015. About 8 years old now, no mechanical issues or failed parts. Car maintenance was done as scheduled. Also, I probably change tires, brakes and oil slightly sooner than the average person.
As long as my car works, I think I’ll be able to drive it for another 7 years without a problem before it turns 15. Given that I drive about 6,000 miles a year, by 2030 my car will have about 80,000 miles. Compared to his 130,000 miles on his $2,000 hatchback he drove in 1997, 80,000 miles is still nothing.
I wonder what good safety features I’m giving up by not switching cars soon. 13 years is a long time for him to be an automotive engineer. So, ten years into 2025, you’ll have to seriously consider whether it’s a good idea to buy a new used car.
Current car purchase plan
At the moment I am planning to buy a 2023 Range Rover in 2026. The latest Range Rover has been completely redesigned and goes on sale in 2022. Therefore, purchasing the 2023 version will avoid some of the first year bugs on all newly designed vehicles. pass through.
Buying a 3 year old car from a private party is the best place to get the best value for money. It skips the biggest part of the depreciation curve, but the car still smells like new and may be under warranty. After that, if he owns the car for 10 years, he will have had it for 13 years before considering another purchase.
However, in 2026, we may change our minds, depending on the state of our current cars, other newer cars, and alternative modes of transportation such as self-driving cars. Waymo and Cruise plan to expand their self-driving services by the end of 2023. That would mean I would be driving less miles in my existing car, which could extend its useful life.
Finally, longer average US car years bode well for the average American’s personal finances. This is a bullish data point for the U.S. economy, thanks to rising disposable income and declining auto debt. After all, maybe we should be more optimistic about where we are in the economic cycle.
Reader Questions and Suggestions
Did you know that the average US car age is now over 12 years old? How old is your car and how long do you plan to drive it?
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