Auto Service World
News   January 10, 2023   by Adam Malik

How reliance on average age needs to change

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A prominent aftermarket industry group believes that using average age as part of the formula to judge aftermarket health is “out of touch.”

Vehicle average age is consistently highlighted as a way to gauge the health of the automotive aftermarket. The average age of vehicles in North America is about 12 years. Such a high average age points to the fact that there are many vehicles out there that would be prime aftermarket targets.

Indeed, average vehicle age has long been a mainstay of aftermarket potential, noted Lang Marketing.

“Despite its wide use, average age is out of touch with key aftermarket dynamics and can be misleading,” it said in a recent Aftermarket iReport. “For example, when new vehicle sales surge, average age can fall dramatically despite an increase in the number of older cars and light trucks, which are much more important than new vehicles for aftermarket volume.”

Instead, Lang proposed focusing on a different metric that would paint a better picture and be of greater significance to better judge aftermarket potential: The number of vehicles that are four years and older. These are vehicles that are more often to be in the aftermarket, said the report, Vehicle Average Age Metric is Out of Touch.

“This requires a new means of defining and calculating vehicle average age,” Lang added.

Vehicles that are four years and older generate about 96 per cent of all light vehicle aftermarket product volume, the report said.

And so it has coined a new term: Aftermarket Vehicle Average Age. “[This] is a more accurate measure of a VIO’s aftermarket potential: the average age of cars and light trucks four years and older,” Lang said.

It points out that vehicle average age is susceptible to quirks. For example, there is a relative dearth of new vehicles entering the market, bumping up average age. When pent-up demand is met and older vehicles are scrapped, average age will invariably slide.

“By excluding vehicles aged three years and younger, this new metric focuses on the aftermarket potential of a select segment of the vehicle population rather than all light vehicles on the road,” Lang said.

So if it were to apply the new metric, the average age of aftermarket vehicles in the U.S. would have been 14.9 years at the beginning of 2022.

“A significant advantage of ‘aftermarket vehicle average age’ is that it can be predicted up to three years in the future more accurately than the conventional average age, which depends on estimates of new vehicle annual sales and annual vehicle scrappage,” the report noted.

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