Why’s Canadian average vehicle age so low?

The average age of vehicles in Canada is more than two years lower than American vehicles and the gap has a fairly simple answer: It’s all thanks to a pipeline of vehicles exiting Canada and heading to the U.S.

Canada’s average vehicle age is 10.5 years. In the U.S., it’s more than two years higher at 12.6 years. During this year’s AIA Canada National Conference in Toronto, Todd Campau, aftermarket practice lead at S&P Global Mobility, explained why there’s such a gap.

He noted that the number of vehicles in operation in Canada is steady at 26.7 million. Campau pointed out that even though new vehicle sales are not what they used to be, there is still growth. The data left him curious. So he investigated why vehicle age wasn’t the same or closer for both sides of the border.

During the session, The Impact of the Evolving Vehicle Fleet on Vehicles in Operation and Vehicle Kilometres Travelled, he explained what he found. He told the audience that there’s some correlation between the Canadian dollar and vehicle exports to the U.S. When the dollar is low, it’s cheaper for Americans to import vehicles — and that’s exactly been the case for several years.

“And one of the things that is definitely impacting your fleet are exports going into the U.S.,” he explained.

He checked out federal databases, which showed what was taking place.

In particular, the third quarter of 2020 and second quarter of 2022 each saw about 180,000 vehicles shipped from Canada south of the border. That wasn’t tied to the exchange rate, however — it was because there was a dearth of vehicles in the U.S. marketplace and eyes turned to Canada to fill the gap.

Since that later date, quarterly exports to the U.S. have been around at least 50,000 vehicles.

“There’s been a stronger dollar, there’s the high demand for vehicles in the U.S. And so importers in the U.S. have been very successful grabbing vehicles here and selling them there for profit,” Campau observed.

Furthermore, the vehicles crossing the border have been on the younger side of the spectrum, meaning U.S. importers are specifically targeting low-age cars and light trucks.

Back in 2016, the average age of a vehicle going to the U.S. was approaching nine years old. Today, they’re no more than seven on average. That has Campau concerned about the Canadian aftermarket.

“For me, that’s one of the big yellow flags for the market here,” he said.

If older vehicles nearing end-of-life are the ones being exported, that’s one thing. But vehicles just entering the aftermarket sweet spot being shipped down south creates a problem in the Canadian market.

“That’s taking real aftermarket opportunity away because that’s right in that sweet spot of aftermarket repair,” Campau explained. “So this is something that I think is very important for the marketplace to be sensitive of.”