We are a nation of consumers who always want the latest gadgets and the newest versions. We buy inexpensive clothes at chains like H&M and toss them the next season. We get rid of perfectly serviceable outdoor grills and stoves to buy the latest and greatest with more bells and whistles. We willingly try new toothpastes, razors and motorized stain-treatment systems when they hit the shelves.
So it should come as no surprise that we do the same with our cars. The dramatic rise in leasing in the past decade, along with the alluring financing plans available these days, has made getting in a new car every two or four years easier -- and more tempting -- than ever.
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But as ads for new cars saturate the airwaves and fill the newspaper, I got to wondering what was happening to all the old cars that people are trading in so they can drive off in those groovy new wheels. Is there a huge backlog of dusty cars piling up somewhere that are just two years old, or worse, eight years old?
In fact, there has been a flood of older cars pouring into dealerships over the past several years. The main side effect of this dynamic has been to push prices down in the used-car business. But so far the used-car market, always efficient, has become even more so. And some demographic trends have helped stave off a full-bore glut of older vehicles.
Still, the long-term effects of the industry's sales trends are unnerving, and unlikely to change anytime soon.
"It has a waterfall effect all the way through the used-vehicle market, from the high end all the way down to the low end," said Tom Webb, an economist with Manheim Auctions of Atlanta, the nation's largest wholesale auction company. The way Webb describes it, manufacturers are "forcing" the market by "pushing more product out there than there is underlying demand for."
The fastest-growing segment of available cars encompasses those that are 10 years and older, because automobiles today are engineered to last much longer than they used to. Getting 100,000 miles out of an engine used to be a real feat; today it's no big deal.
But all those used cars are starting to puddle at the bottom of the age scale. In 1993, the median age of all passenger cars on the road was 7.3 years. Now it's 8.6 years. And demand for these oldies but goodies is getting pretty slack.
"To a certain extent, the engineering life of a vehicle in many cases surpasses its economic life," Webb said. "A lot of these vehicles [become] the third or fourth vehicle in a household. They may not get driven much, may not have much market value, but they're still mechanically sound."
Indeed, the number of cars owned by U.S. households has been creeping up, which has helped limit the number of vehicles stacking up on used-car lots. So is the fact that we drive our cars more per year now -- about 12,200 miles a year, up from 9,500 in 1960 -- which is keeping the average lifespan of cars from climbing even faster than it already is.