Trends In Car Ownership

The term “American Dream” was coined in 1931 from the book titled Epic of America. As the decades have passed, the dream has grown to include a family with a house, sedan or station wagon, and on average 2.3 kids. Fast forward to today, and the average new home price is over $487,000, and cars are approaching $49,000. The only thing that has decreased in the American family is the number of kids, which is a tad over 1.9 on average.

The average new car payment is over $780, which does not include maintenance and gas. To put these numbers in perspective, in 1970, the average payment on a brand-new vehicle was a whopping $110 monthly, and a gallon of gas topped $0.36.

The need to own a car has only gotten stronger. According to Forbes, 91.7% of US households own at least one vehicle. Taking the study further, 22.1% of households own three or more vehicles. The most recent statistics say registered cars in the US are up 3.66%, continuing an earlier trend.

Information is Power

In the last decade, the automobile industry has been turned upside down due to market forces beyond its control, governmental regulations, and difficulties of its own making. Upheavals with any industry; the end result invariably benefits the consumers with better pricing and operating transparency.

The internet brought about such rapid change that no one in the car business could predict what was coming. The industry was ill-prepared and exposed several deep vulnerabilities. The onslaught of new car buying opportunities left automakers and dealerships searching for answers.

Online vs. Dealerships

In the past, car buying meant heading to the dealership and choosing the car of your dreams from the inventory on the lot. Some people would rather have a root canal than buy a car at the dreaded dealership; others love negotiating.

The pandemic, electric vehicles, and the proliferation of online shopping sites have changed the industry forever. Dealerships allow for negotiation and test drives, while online shopping offers the ultimate convenience of buying your next car in the comfort of your home.

New and used vehicles are still painfully expensive and out of reach for most young families who are desperate for a car or truck. Adding a significant payment burden to the monthly budget is painful for most Americans, no matter where they shop.

Holding On

Turmoil in the automotive world has forced every age group to look for alternative ways to exist and thrive. High costs of ownership, rising MSRPs, and exorbitant payments have pushed back on the American Dream of car ownership.

Americans are holding onto their vehicle for much longer than in the past. According to S&P Global, the average age of passenger cars still running is 12.5 years, the sixth year of increases. Faced with a jumbo payment or holding onto the vehicles in the garage, most Americans opt to hold onto what they have. Even if it means more maintenance costs. Auto mechanics are now under the gun of the rising number of used vehicles hitting their shops in numbers never seen before. In some cases around America, there is a three-week wait time to get a vehicle into the shop.

Quality Never Fades

Another reason why the average age of a vehicle is increasing is that American manufacturing has improved. Years ago, it was a given; when a person purchased a Toyota, they knew the car would last forever. At the other end of the spectrum, American-built cars and trucks were guaranteed to break down by 150,000 miles.

Planned obsolescence was a key phrase that can be traced back to the 1920s. The term was a made-in-America way of doing business. Build a car or truck with the idea of the product breaking down or not meant to last, forcing consumers to upgrade. Several car builders are no longer in business due to their way of building automobiles and the intense competition from Japanese and Korean automakers.

Over time, the impact of planned obsolescence on the environment, consumers, and financial burdens took its toll, and Americans and the World demanded change. Powerful citizen groups and governmental regulations took notice of the debilitating effects of throw-away products with no long-term benefits.

In recent years, the automotive production tide has started to turn. Engines are lasting longer with proper care. Manufacturers are stressing the value of taking care of their automobiles. Oil change shops are popping up everywhere, making routine maintenance easier than ever.

Modern paints and primers keep bodies from rusting as they did in the past. Chemical additives and rust preventives are helping vehicles last longer than ever before. American-built cars and trucks are now reaching 200,000 miles, with well-maintained vehicles hitting 300,000 and more.

Shaping the Future

Automakers are fast becoming technology companies rather than building cars and trucks. Automakers must have expertise in software and the cloud to shape the industry’s future. For several years, market forces have demanded change to a centuries-old industry. The success of an automotive brand is linked to its capacity to innovate and evolve.

New business concepts quickly capture their fair share of the opportunities to serve the mobile automotive customer.

• More people opt for city life, and owning a vehicle makes little sense. In large urban areas, people have a vast number of options to get around town, such as the subways, buses, carpooling and electric scooters, which are all on the rise.
• Companies such as Lyft and Uber are all the rage and helping shape the future.
• Working from home is another market force reminding us that a vehicle may not be needed after all.
• Shared mobility is an innovative strategy that gives multiple individuals short-term access to privately owned transportation on an as-needed basis. Each person has their app with login credentials and the times they can use the vehicle.

Final Word

The Automotive World is in the beginning stages of massive consolidation and new partnership agreements. Automakers are redefining success by embracing new technologies such as autonomous driving to optimize dead time in traffic jams and long-haul trips. The automobile may become the office of the future with advanced connectivity solutions, video integration, and work collaboration.

Automakers build vehicles and support structures to ensure everyone reaps the benefits.