"There have never been as many cars on the road—around 290 million light vehicles—and they have never been so old

The number of light vehicles on American roads has reached a record high—around 290 million—and they’ve never been older. This shift reflects improved manufacturing quality, as vehicles routinely surpass 100,000 miles, a milestone that used to be remarkable. Thirty years ago, the average car was 8.4 years old; today, it’s 13.6 years.

However, not all the news is positive. Inflation, high interest rates, and supply chain disruptions have curbed new vehicle purchases. According to the Bureau of Economic Analysis, the four-year rolling average of annualized vehicle sales is about 15.5 million, compared to 17.7 million just before the pandemic.

This aging vehicle fleet might seem like a boon for auto parts and repair businesses, as older cars require more maintenance. Vehicles between 4 and 11 years old typically receive significant care, falling within the industry’s "sweet spot." But despite the large number of vehicles in this range, some indicators suggest that consumers are opting for cheaper solutions—or delaying maintenance altogether.

In May, tire chain Monro saw a 12% drop in its stock after reporting a steep decline in same-store sales for fiscal year 2024. Management attributed the drop to financially strained consumers choosing lower-cost, entry-level tires amid a flood of cheap imports. Spending on services like brakes and shocks declined even more.

Similarly, in September, Genuine Parts, the parent company of Napa auto stores, experienced its largest one-day stock drop in decades—over 20%—due to disappointing third-quarter results. While sales to commercial buyers held steady, retail sales dropped significantly. CEO William Stengel noted a "cautious end consumer" deferring maintenance-related purchases.

Valvoline, known for affordable oil changes, recently tempered expectations, leading to a 9% drop in its stock price. CEO Lori Flees observed that some competitors, such as tire service centers, are offering discounted oil changes to attract traffic, further straining Valvoline’s business.

Even under normal circumstances, many drivers neglect recommended service intervals for reasons unrelated to cost. According to Carfax, 30% of U.S. vehicles are overdue for tire rotations, and 19% are behind on oil changes.

Skipping maintenance makes less financial sense than ever. The Manheim Used Vehicle Value Index has risen 36% in the past five years, making regular upkeep a solid investment. For many, their car is not only vital to their livelihood but also their most valuable asset. Data from Placer.ai reveals that shoppers at leading auto-parts retailers have median household incomes roughly 7% below the national average, reflecting the financial pinch many face.

While penny-pinching at the grocery store may involve switching to generic brands, cutting corners on car maintenance carries greater risks. For instance, a no-name "Entry" level tire for a Ford Explorer might cost $149.99 with a 40,000-mile warranty, while a Goodyear tire costs $254 but includes a 60,000-mile warranty and superior safety features.

This trade-off hasn’t necessarily benefited premium manufacturers like Goodyear, which saw an 8.3% decline in units sold last quarter in the Americas. The shift toward cheaper imports could permanently erode market share for iconic American brands, though repairs and services for cars will remain local.

The rise of electric vehicles (EVs), which require less maintenance, could impact the industry over time. However, this trend is too recent to explain the current decline in spending. Other factors, such as reduced driving during the pandemic and the ongoing prevalence of remote work, also play a role. Miles driven dropped sharply in 2020 and only recently returned to pre-pandemic levels.

Even if the economy worsens, maintenance spending may stabilize. During the 2007-2009 recession, major auto-parts retailers outperformed the S&P 500 by an average of 55 percentage points, as fewer new cars were purchased and older vehicles required repairs.

AutoZone CEO Philip Daniele explained that during tough economic periods, consumers tend to delay maintenance early in the cycle but eventually return to repairing their vehicles as they recognize the long-term benefits of upkeep. Brent Kirby, president of O’Reilly Automotive, echoed this sentiment, pointing out that historically tough periods in the industry have often been followed by a rebound in customer activity.