U.S. Scrappage Rate Grows as More Cars Junked, Fewer Sold

A record 1.2 million more light vehicles went to U.S. scrap yards in the 15-month period ending Sept. 30, 2009 than were added to the country’s registration rolls.

R.L. Polk & Co. data shows 14.8 million cars and light trucks met the crusher in that timeframe, while just 13.6 million new vehicles were added to the registration rolls amid the severe U.S. economic recession that crippled new-vehicle sales through much of 2009.

Related document: U.S. Vehicle Average Age and Scrappage Rates

The longer survey period – splitting with the company’s traditional 12-month tally ending July 1 – allowed Polk an earlier reading of the effects of the U.S. government’s “Cash-for-Clunkers” incentive in July-August of last year that required vehicles turned in under the program to be scrapped.

As a result of more vehicles being taken off the roads, the scrappage rate for both light vehicles and total vehicles each rose to 6.1% in 2009, up from 5.7% and 5.8%, respectively, in 2008.

While the scrappage rate for cars rose to 7.7% in 2009 – the highest in at least 10 years – after falling to 5.1% in 2008 from 5.5% the prior year, that of light trucks fell to 4.2% in 2009 from 6.4% in 2008.

The highest scrappage rates for light vehicles (6.7%) and total vehicles (6.8%) in the last 10 years occurred in 2000.

In addition, the scrappage rate is forecast to remain strong at least through 2010, despite a significant recovery in new-vehicle sales to some 11.5 million units.

Also signaling the likelihood of strong pent-up demand in coming years, the average age of light vehicles on the road as of Oct. 1, 2009, rose to 10.2 years from 10.0 years in 2008, marking the highest level since 1995.

As with the scrappage rate, the vehicle-age calculation was increased to a 15-month period in 2009 and revised to reflect “average” age rather than the “median” age that had been the norm for more than 40 years.

Polk says the move allows it to “better reflect sensitive changes in the composition of the U.S. vehicle fleet.”

In addition to fueling demand for new vehicles, the aging vehicle population also represents increased opportunity for aftermarket repair shops as the increased complexity of vehicles precludes many “do-it-yourselfers” from fixing their own cars and trucks.

The latest available state registration data compiled by the Federal Highway Admin. shows the number of cars, trucks and buses on U.S. roads rose to a record 251,890,511 as the end of 2008, albeit just 0.2% more than were registered in 2007.

Related document: Vehicles in Operation in U.S. by Region

The minuscule increase, compared with 1.4% in 2007 and 1.1% in 2006, reflects the onset of the economic meltdown that led to a dearth of new-vehicle sales and the likely prospect of fewer vehicles on the rolls at the end of 2009.

However, motorcycle registrations, in the face of sky-high fuel prices, showed strong growth in 2008.

FHWA data shows an 8.5% increase in the number of “bikes” on state registration rolls, up more than 620,000 from like-2008’s 7,291,276, itself more than 492,000 units, or 7.2%, ahead of 6,798,797 in 2006.

Total motor vehicles on U.S. roads reached 259,802,565 in 2008, compared with 258,501,422 the previous year and 254,372,207 in 2006.

At the same time, a Ward’s analysis of FHWA car and truck data shows little change in the makeup of regional vehicle fleets in 2008.

The region adding the most vehicles to its registrations tally in the year was the East North Central, where the rolls swelled by 333,276 units or 0.8%.

That was followed by 286,129 additional vehicles tallied in the West South Central region, for a 1.1% gain, followed by the Mountain region, where 212,677 more units equaled a 1.2% gain.

Vehicle registrations increased by 134,050 units, or 0.7%, in the East North Central region, with much smaller gains in New England (46,096, or 0.4%) and the Mid-Atlantic (20,846, or 0.1%).

Only three areas of the country registered marginally fewer cars and trucks in 2008 than in 2007, including the Pacific region – with the second-largest vehicle population – where car and truck registrations fell by 251,059 units, or 0.6%, to 44,109,617.

The East South Central region ranked second in vehicles “lost,” with a 105,264-unit, or 0.7%, decline to 15,413,976.

It was followed by the South Atlantic – the region with the largest vehicle population – where just 1,577 units, or less than one-tenth of 1%, were deleted from the rolls, bringing the total there to 48,264,206 vehicles at the end of 2008.

[email protected]