Economist Writing Every Day

The following chart from Arbor Research shows that the average age of cars on the road in the US is 14.5 years. If we go back to 1995, it was almost half that, and the increase has been steady since over the past 30 years. Similar data from the Bureau of Transportation Statistics confirms these numbers.

Why would this be? I see two primary explanations that are possible. One is that cars are becoming more reliable (better quality), so consumers are happy to drive them longer. The other is that cars today are less affordable, so people are only hanging onto old cars because they are forced to. One of these is a happy explanation, one is consistent with a narrative of stagnation. Which is true?

I am not a car expert, so I can’t speak to the first, though I will note that there are Facebook groups dedicated to people that have cars with hundreds of thousands of miles on their odometers.

On the affordability question, we do have some good data, but it points in the opposite direction: cars are much more affordable today than in 1995, or even before that.

Take the Toyota Camry, for example. It has been the best-selling passenger car in the US since 1997 (though the best-selling vehicles in the US are trucks, with the Ford F-150 at the top). About 300,000 are sold every year in the US. And relative to the median wage in the US, they are more affordable than ever (also keep in mind that prior to 1992, the Camry was a much smaller car):

In 2024, it took 1,062 hours of work at the average wage to afford a Toyota Camry, just two-thirds of the number of hours it took in 1995. And while many consumers finance their new car purchases, interest rates (despite their recent rise) are lower than they were for almost all of the 1990s: