Polk Study Finds More Vehicles Scrapped Than Added to Fleet - Engine Builder Magazine

Polk Study Finds More Vehicles Scrapped Than Added to Fleet

number of cars and light trucks scrapped in the past 15 months
substantially outnumbers new vehicle registrations in the U.S. during
the same period, according to recent analysis by R. L. Polk & Co.

More than 14.8 million cars and light trucks were retired from the
fleet between July 1, 2008, and Sept. 30, 2009, compared to new
registrations of slightly more than 13.6 million, resulting in an
overall scrap rate of 6.1 percent. This includes thousands of units
scrapped during last year’s CARS program, also known as “Cash for
Clunkers,” and follows a trend seen by Polk over the past five years.

Polk also reports an increase in the average age of light vehicles on
the road, up 21 percent in the past 14 years. The average age for all
light vehicles during the 15-month period is 10.2 years. Additionally,
increases in the average age are supported by the fact that consumers
are keeping their cars and trucks longer. As of September 2009, the
average length of ownership for a new or used vehicle among U.S.
consumers was 49.9 months, up from 45 months a year ago the same time.

These trends are supported by a number of factors, including the
economy, limited financing and leasing options available in the market,
extended warranties offered by OEMs and improved vehicle durability and
quality of vehicles. They also provide opportunity for various business
segments of the industry, according to Polk.

“As vehicles age and consumers continue to hold onto them longer, there
are significant opportunities for repair services and parts demand for
the aftermarket as vehicles are falling out of warranty as they age,”
said Mark Seng, vice president, sales and client services, aftermarket
and commercial vehicle at Polk. “The increased complexity of vehicle
repairs also presents a business opportunity for service professionals
as traditional do-it-yourself consumers are less likely to attempt
complicated technical work on their vehicles.”

Dealers will have an opportunity to develop programs geared toward
service loyalty marketing as they seek to hold on to a growing base of
customers, according to Polk. “The trends we’re seeing suggest great
motivation for dealers seeking to maintain a longer-term relationship
with their customers,” said Lonnie Miller, vice president, marketing
and industry analysis at Polk. “Service-oriented loyalty programs can
significantly contribute to improving business and overall loyalty
among customers.”

Polk expects conditions facing the U.S. automotive industry today to
remain through 2010 and expects trends for scrappage and vehicle
ownership to continue for at least another year. This assessment is
largely based on current industry dynamics, coupled with Polk’s annual
forecast of a moderate increase in light vehicle sales to 11.5 million
units this year. It also assumes a general upward trend for vehicle
scrappage rates as high volumes of older vehicles continue to retire
from the U.S. fleet.

Polk has provided authoritative information and analysis from its
review of dynamics among the U.S. vehicle population for more than 60

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