Vehicle ownership length

U.S. consumers keeping cars longer

Consumers in the United States are keeping their vehicles longer, with the average length of ownership hitting a record of 71 months for new vehicles and 50 months for used vehicles in the third quarter of 2011 according to automotive marketing firm Polk.

Polk attributes the increase in new car ownership to a few factors, including longer financing periods that allow for smaller monthly payments, increased durability of vehicles being produced by automakers, and longer warranties that make retaining a new vehicle less risky.

Polk also notes the increased length of ownership that took place beginning in 2008 when the economy began to take a nosedive. The firm says many consumers at that time became more cost-conscious, and didn’t want to invest in something as expensive as a new vehicle.

Polk says that while new vehicle sales will likely continue to rise over the next few years, that doesn’t necessarily mean length of ownership will decrease. The firm says consumers are still feeling the effects of the economic downturn, and will continue to penny-pinch for the next few years, avoiding large purchases.

The implications of increased ownership length for several automotive businesses are likely to be positive according to Polk. It predicts that automotive parts stores will have an advantage, as vehicle owners are increasingly looking at do-it-yourself repairs in order to save money on costs.

Used vehicle dealers, meanwhile, are likely to see a lower supply of inventory, meaning they will be able to charge more as demand increases. As a byproduct, this is another way new car dealerships could benefit, as consumers looking for used vehicles may be able to be converted to buying new, where product is typically much more plentiful.

Third-party extended warranty providers should also benefit from this opportunity that will allow them to sell to consumers who hold on to their vehicles beyond the expiration date of manufacturer warranties.

Data for this study was gathered over the last decade, beginning in Q4 of 2002.

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Tags: new, ownership, polk, used