Study Shows More Vehicles Scrapped than Bought in 2009

According to R.L. Polk & Co, Americans scrapped more used vehicles in the past year than they bought new replacements for. That may have hurt dealers then, but it could signal a slight increase in car sales in the near future.

Based upon new vehicle registrations, only 13.6 million vehicles were registered in the 15-month time span between July 1, 2008 and September 30, 2009, while more than 14.8 million vehicles were scrapped in the same period. Although it’s easy to suggest “Cash for Clunkers” as the reason for the uptick in scrapped vehicles, the program required consumers to purchase a new vehicle for each car scrapped. The disparity between discarded vehicles and new registrations stems from consumers getting rid of an older vehicle and not purchasing a replacement.

Polk claims this reflects a trend of consumers holding onto vehicles for a longer period of time. According to the group, the average age of all light vehicles currently on the road is 10.2 years, and the average length of vehicular ownership is 50 months, up from 45 months in 2009.

Once a vehicle is scrapped, customers will likely need to seek a replacement -- and for that reason, many in the industry view scrappage rates as a precursor to future vehicle demand. Expect to see new and used vehicle sales increase slightly over the next few months, but don’t expect ownership habits to change. Polk predicts consumers will continue to hang onto vehicles for increasingly lengthy periods of time, creating “significant opportunities” for automotive service operations.

Source: R.L. Polk & Co.

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