Americans Hold Car-Buying Intervention: 'We Won't Cave to High Prices!'

Ladies and Gentlemen, rev up your engines! Let's take a ride on the not-so-new, slightly worn-out American road of motor vehicles. According to the sharp minds over at S&P Global, we're cruising in style, and by "style," I mean clunkers that would make Doc Brown frown. The average age of cars and light trucks on American roads is now 12.5 years. Yikes!

Don't get me wrong, we love a good classic car, but this is due to something far less romantic: bottlenecked supply chains and inflation running around like a loose cannon.

S&P Global looked at the odometer and found that 2023 marked the sixth year in a row that our beloved jalopies are getting long in the tooth. The rise in average vehicle age sprinted like a cheetah between 2022 and 2023, matching the same trend we saw during the "let's-not-talk-about-it" recession between 2008 and 2009.

Todd Campau, the car-whisperer and associate director of aftermarket solutions for S&P Global Mobility, shared, "We expected some bumpiness coming out of 2021, but the back half of 2022 was like a jalopy ride on a cobblestone street, with inflation and interest rates rocking the vehicle." He added, "Though the odometer will keep climbing in 2023, we anticipate the speedometer will slow down, and we'll shift gears towards normal new vehicle sales by 2024."

Okay, get this. America is sporting more than 284 million vehicles on its roads, making us look like the Fast & Furious franchise. As light-duty trucks become the "in thing," the number of passenger cars is set to fall below 100 million, a figure not seen since bell-bottoms and disco balls dominated the scene.

Meanwhile, the aftermarket repair guys are rubbing their hands together, anticipating a windfall as they gear up for the influx of 6-14 year-old cars projected to increase by 10 million in the next five years. Get your wrenches ready!

According to S&P Global, the greying of our vehicle fleet in 2022 was due to "supply chain blues causing a car drought" followed by "interest rates and inflation playing the Grinch with consumer demand."

Let's not forget the whirlwind of global lockdowns and public health restrictions over the past three years, causing the supply chain to do the cha-cha in the most unpredictable way. Think of sectors like automotive manufacturing, textiles, and basic metals having a salsa dance-off, with inflation acting as the tough-to-please judge.

Not to mention, persistent labor shortages are like a nagging backseat driver for companies trying to hire. Current stats show a whopping 9.6 million job openings and 6.0 million job seekers, causing an inflation-induced tug-of-war as companies raise their game (and their pay) to attract workers.

Meanwhile, Federal Reserve officials, armed with their trusty anti-inflationary weaponry, are cranking up the federal funds rate to between 5.0% and 5.25%. And this folks, is making everything from buying a car to buying a latte more expensive.

As for our economy? Well, let's just say it's not exactly "vroom vroom." Growth has hit the brakes, slowing to a 1.1% annualized rate in the first quarter, according to the Bureau of Economic Analysis. Guess we're all bracing for a bumpy ride in the backseat of this economic rollercoaster.