Length of vehicle ownership often depends on the age of the owner, but Americans overall are keeping their cars longer.
In an Experian Automotive review of 24 vehicle brands, buyers of new Mercurys top the list of owners who keep their vehicles the longest — an average of 80 months. Buick owners are next at 76 months.
Conversely, new Mini buyers show the shortest period of ownership — less than 40 months on average. That's followed by Hummer owners at 42 months.
“Mercury and Buick owners tend to be older, and older people tend to keep their vehicles longer,” Andrew Sheehan, Experian's senior vice president-marketing and product management, says at a recent National Remarketing Conference in Las Vegas.
Porsche owners top the longest-ownership list for people who buy used vehicles. Buyers of used Porsches keep them an average of almost 60 months.
Americans are keeping their vehicles longer largely because the recession has curtailed consumer spending, especially on big-ticket items.
“Length of ownership has increased considerably,” Sheehan says, wondering how long the trend will last and acknowledging he owns a '97 Toyota 4Runner. “There has been a crushing change from five years ago.”
In 2009, owners of new vehicles retained them for an average of nearly 70 months. That's 24 months longer than in 2004, when new-vehicle sales were a retrospectively staggering 17.3 million compared to 10.4 million last year.
Buyers of used vehicles are keeping those longer, too: an average of 50.7 months in 2009 compared with 36.7 months in 2004.
Eighty percent of light vehicles still in operation are less than 14 years old. The most prevalent are '05 models. Nearly 16 million of those remain on the road.
Besides the longer ownership, a greater number of consumers are opting to buy used cars over new. That's not particularly welcome news to auto makers struggling to regain lost ground.
Of new-vehicle owners replacing their vehicles in first-half 2009, 45% purchased a used vehicle compared with 30% in 2004.
“The migration from new- to used-vehicle buyers is core to the new-vehicle sales challenge,” Sheehan says.
The trend hurt Chrysler Group LLC the most. New-to-used vehicle migration for Chrysler brands went from 24% in 2004 to 55% in 2009. Dodge-brand owners showed the highest migration rate, from 33% to 55% during that 5-year timeframe.
The luxury-car segment showed the great migration of purchases going fromnew to used vehicles. Topping that list is the Jaguar brand at 39%.
Of the six top-performing nameplates for used-vehicle sales, four are luxury brands: Mercedes-Benz, Land Rover, Porsche and BMW. Hyundai and Suzuki are the others.
Many migrating luxury-car buyers bring their good credit histories with them to the used-vehicle market. “There are steadily rising consumer credit scores on used vehicles at franchised dealerships,” Sheehan says.
From 2008 to 2009, the average amount financed on a used-car loan has dropped from $16,014 to $15,733. The average term has dropped from 59 to 57 months.
The average monthly payment is down $6, to $332. The average interest rate has gone from 9.94% to 9.14%.
Sheehan says the popularity of auto makers' certified pre-owned vehicle programs has cut into new-car sales.
Meanwhile, owners of used Fords and Chevrolets have the highest loyalty to their brands. On the other end of the scale, Toyota, Honda and Mercedes owners are least likely to repurchase those brands.