Foreign nameplates have expanded their share of light vehicles on U.S. roads and will account for all auto parts growth over the next five years
Fort Wayne, Ind.—Car and light truck scrappage traditionally increases as new vehicle sales grow and vehicle age advances. Despite record-high new vehicle volume between 2014 and 2019 and the rapidly increasing average age of vehicles on U.S. roads, average scrappage rates remained relatively low through 2020, according to “2022 Lang Aftermarket Annual” report.
“Scrappage has been concentrated among domestic nameplates for a number of years. This has changed the domestic and foreign nameplate mix of both vehicles in operation (VIO) and auto parts sales across the U.S. aftermarket,” states the report.
According to historic trends, the number of vehicles scrapped during 2014 through 2019 should have been significantly higher than five years earlier, propelled by record-high annual new car and light truck sales. However, the opposite occurred, according to Lang. The following are highlights of this report.
Average Age and Scrappage
As vehicle sales soared in the U.S., the average age of cars and light trucks increased at a rapid pace from 2014 to 2020, reaching a record-high of 12.5 years by the middle of 2020. This also should have boosted scrappage rates, but they remained low.
Annual Scrappage Rates
Annual scrappage averaged more than 5.3% of total light vehicles in operation between 2000 and 2010. Despite the scrappage of more than 80 million cars and light trucks between 2014 and 2019, annual scrappage rates averaged less than 4.6%.
Total scrappage picked up in 2020, prompted by the record-high scrappage of passenger cars in the U.S.
Even with this increase, scrappage rates between 2016 and 2020 averaged less than 4.7%, well below what should have occurred had traditional trends prevailed.
Nameplate Scrappage and New Vehicle Sales
There were significant differences in the nameplate mix of new vehicle volume during 2014 through 2020 compared to nameplates scrapped.
During this seven-year span, domestic nameplates averaged 45% of new car and light truck sales in the U.S., with foreign nameplate average sales share at 55%. During this time, the average share of scrappage for domestic nameplates was approximately 50% higher than their share of new sales, and foreign share of scrappage was only approximately two-thirds of their new sales share.
Two Forces Combine
With the combination of strong foreign nameplate share of new vehicle sales and high domestic nameplate share of vehicle scrappage, foreign nameplates have dramatically expanded their share of light vehicles on U.S. roads.
This nameplate shift in the nation’s VIO will increase the foreign nameplate share of aftermarket product volume, with foreign nameplates generating all auto parts growth over the next five years.