Here’s Why Americans Are Keeping Their Cars Longer than Ever
As cars get more reliable Americans are holding onto their vehicles for longer than ever before. The average age of cars and light trucks is now 11.5 years old, according to a new report from IHS Automotive.
In addition to better reliability, cars are getting older because Americans bought far fewer new cars in the years following the Great Recession, as concerns lingered about unemployment and the strength of the economy.
Even as consumers have started purchasing new vehicles again, they’re still holding onto their older ones. The average length of ownership of a new vehicle reached 6.5 years in the first quarter of 2015, more than two years longer than in 2006. The number of cars more than 12 years old continues to grow and is expected to increase 15 percent by 2020.
Related: The Incredible Disappearing American-Made Car
IHS predicts that the average age of vehicles will inch up slightly over the next few years, hitting 11.7 years in 2018.
The number of cars on the road hit a record 258 million, posting a 2.1 percent increase over last year, driven by the purchase of new cars. IHS expects that volume of cars less than 5 years old will increase by 24 percent over the next five years.
Consumer sales of autos were on pace to rise 4.2 percent this month, according to TrueCar, compared to July of 2014, thanks to increased demand, summer sales events and the growing popularity of premium brands.
Top Reads from The Fiscal Times:
- Why Hillary Clinton’s Tax Plan to Soak Investors Won’t Work
- US Health Spending: $3.1 Trillion a Year and Growing
- Joe Biden: The Looming Threat to a Republican Presidency
Chart of the Day: SALT in the GOP’s Wounds
The stark and growing divide between urban/suburban and rural districts was one big story in this year’s election results, with Democrats gaining seats in the House as a result of their success in suburban areas. The GOP tax law may have helped drive that trend, Yahoo Finance’s Brian Cheung notes.
The new tax law capped the amount of state and local tax deductions Americans can claim in their federal filings at $10,000. Congressional seats for nine of the top 25 districts where residents claim those SALT deductions were held by Republicans heading into Election Day. Six of the nine flipped to the Democrats in last week’s midterms.
Chart of the Day: Big Pharma's Big Profits
Ten companies, including nine pharmaceutical giants, accounted for half of the health care industry's $50 billion in worldwide profits in the third quarter of 2018, according to an analysis by Axios’s Bob Herman. Drug companies generated 23 percent of the industry’s $636 billion in revenue — and 63 percent of the total profits. “Americans spend a lot more money on hospital and physician care than prescription drugs, but pharmaceutical companies pocket a lot more than other parts of the industry,” Herman writes.
Chart of the Day: Infrastructure Spending Over 60 Years
Federal, state and local governments spent about $441 billion on infrastructure in 2017, with the money going toward highways, mass transit and rail, aviation, water transportation, water resources and water utilities. Measured as a percentage of GDP, total spending is a bit lower than it was 50 years ago. For more details, see this new report from the Congressional Budget Office.
Number of the Day: $3.3 Billion
The GOP tax cuts have provided a significant earnings boost for the big U.S. banks so far this year. Changes in the tax code “saved the nation’s six biggest banks $3.3 billion in the third quarter alone,” according to a Bloomberg report Thursday. The data is drawn from earnings reports from Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
Clarifying the Drop in Obamacare Premiums
We told you Thursday about the Trump administration’s announcement that average premiums for benchmark Obamacare plans will fall 1.5 percent next year, but analyst Charles Gaba says the story is a bit more complicated. According to Gaba’s calculations, average premiums for all individual health plans will rise next year by 3.1 percent.
The difference between the two figures is produced by two very different datasets. The Trump administration included only the second-lowest-cost Silver plans in 39 states in its analysis, while Gaba examined all individual plans sold in all 50 states.