INVESTMENT:
Older cars keep their shine as drivers pinch pennies
It has faded paint, a leaking sunroof and 295,000 miles on the odometer, but Joey Rodriguez doesn’t plan to stop driving his 1995 Nissan 200SX anytime soon.
“My mechanic told me it’s one of the cleanest engines he’s ever seen,” said Rodriguez, a building inspector. “It’s paid off. If I (found) a car with the same kind of gas mileage, I’d end up with another car payment — much more than I want to spend right now.”
Rodriguez, who lives in St. Cloud, Fla., is one of a growing number of Americans hanging onto older cars. The economic downturn, longer loan terms and hardier engines are discouraging drivers from turning in their clunkers.
U.S. cars are now on average about 11 years old, according to automotive-research firm R.L. Polk & Co. Nineteen per cent of drivers surveyed by marketresearch company NPD Group reported owning a vehicle 15 years or older, compared with 14 per cent five years ago.
Several things are driving the trend.
During the Great Recession, “consumers found value in keeping their existing car on the road,” said David Portalatin, an industry analyst for NPD Group. “For consumers who don’t have the credit nor the income to finance a new vehicle, it makes a lot of sense to continue to repair these cars and keep them going.”
Brian Weston, 41, of Orlando used to buy new cars and trade them in every few years. But after having to short-sell two houses, the health-care technology consultant has had it with debt. So when Weston needed to buy a vehicle recently, he paid $3,500 for a 2002 Chevrolet Trailblazer that now has 142,000 miles on it. He plans to drive the SUV until it wears out.
“I love driving a car that’s paid off, for the first time since I was 18,” he said. “My neighbour just rolled up in this new Hyundai Sonata, or Elantra, or whatever it is. It’s nice. Is it nice enough for me to finance $25,000 or $30,000? No. I just don’t have that kind of compulsion.”
Used cars have outsold new models for years. But new-vehicle sales took an especially hard hit as the economy soured, plunging 21 per cent in 2009 compared with less than a 3 per cent decline for used vehicles, which spiked in value as their supply dropped.
New cars have started bouncing back but are “increasingly skewed to highincome households,” said Tom Webb, an economist with Manheim Consulting, which does research on the automobile market. And “all dealers are much more attuned to their used-vehicle operations,” he said.
Longer-term car loans have also discouraged people from trading in their cars earlier. A standard loan used to last three to five years, said Bryan Funke, a director with Polk. Now, that has grown to six years.
Experts also say engines these days last longer, and some manufacturers are offering longer warranties.
“The cars are built so much better now,” said Jim Zych, who owns an auto-repair shop in Forest City, Fla. “They go so much farther than they used to.”
Brakes, mufflers and exhaust systems don’t have to get replaced as often, Zych said.
But in general, many mechanics say the extended life of cars and trucks has been good for business.