Low Scrappage Rates Contribute to Rising Foreign Vehicle Presence
Aug. 2, 2017—Vehicle scrappage remained low during 2016. That trend, along with rising new vehicle sales, are helping to increase the number of vehicles on U.S. roads, particularly older cars and light trucks, according to Lang Marketing. This is boosting the average age of light vehicles nationwide.
There are significant differences between the annual scrappage rates of domestic and foreign nameplate cars and light trucks, Lang said. Domestic nameplates accounted for 67 percent of cars and light trucks scrapped over the past five years, significantly greater than their 46 percent average share of new vehicle sales.
In contrast, foreign cars and light trucks averaged over 54 percent of new car and light truck sales between 2012 and 2016, much greater than their 33 percent share of cars and light trucks scrapped annually during this five-year span.
These differences in scrappage, coupled with shifts in new vehicle sales, have resulted in a change in the mix of nameplates on U.S. roads. Foreign nameplates represented 39 percent of the total U.S. vehicle population during 2012, with their share soaring to an estimated 44 percent of vehicles in operation during 2016. Foreign nameplates have expanded their light vehicle product share, recording an $11 billion surge in product volume in the auto service market between 2011 and 2016.
When Fixed Ops Business spoke with Lang earlier this year, he pointed out how this could potentially be a boon for dealer repair shops, as people who buy foreign vehicles are historically more likely to visit the dealership for service—which is especially promising with foreign nameplates accounting for approximately 52 percent of all cars and light trucks six to 10 years old in the U.S. at mid-year 2017.