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New Cars Have Shortening Shelf Life

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On: Thu, May 23, 2013 at 5:04PM | By: Chris Weiss


New Cars Have Shortening Shelf Life

When you buy a new smartphone or computer, you have about a week of enjoying owning the coolest, latest technology. Then, it's replaced by something with a more powerful processor, better screen or cooler feature. A year after you bought your phone, it's so obsolete that the manufacturer is replacing it with an entirely new version. Your consumer electronics really don't have that much of a shelf life. According to a new study, the car may be the next consumer good to experience a micro shelf life.

Cars have much longer production cycles than electronics, so cars have not traditionally been so quick to become outdated. If you buy a new sedan this year, it probably won't be that much different from next year's model—unless, of course, you bought it right before a redesigned model was introduced.

According to British auto data firm CAP Automotive, that's slowly changing. In an analysis of new cars from the past three decades, CAP came to the conclusion that cars are advancing more quickly than ever, leading to more pronounced depreciation. The report found that the lifecycle has decreased from close to 10 years back in the 70s and 80s to about three to four years today. While that's still not as short as the hyper-short lifecycles of electronics, it's getting there.

CAP new car expert David Saville said, "As Ford roll out their latest generation Fiesta—and Volkswagen bring out their latest Golf—you can’t help feeling like it’s only two minutes since the previous generation was introduced in each case. The outgoing Fiesta was produced between October 2008 and October 2012 and the previous Golf ran from November 2009 until November 2012.

"Looking back into history the first generation Fiesta was introduced in 1976 and ran until 1983. The Golf was introduced in 1974 and remained substantially unchanged until 1983. Therefore, over three decades these popular models have gone from a lifecycle approaching 10 years, with minimal technical changes, to around four years with quite often substantial technical changes under the skin each time."

Saville said that the phenomenon was introduced by far-eastern manufacturers that originally found they needed to redesign and enhance their vehicles in order to compete with better offerings from established European brands. Increases in technology and demand for better emissions, from both governments and consumers, have also been factors, according to CAP.

Saville explained that the increased pace is a double-edged sword for auto buyers, "On the face of it, the new car consumer really benefits by always having a choice of bang up-to-date models to choose from. But this can also have a negative effect because most buyers have a car that they need to dispose of when they come back into the market. If their existing model isn’t the latest offering from that manufacturer, what the industry calls ‘lifecycle depreciation’ kicks in and makes their car less attractive as a private sale or a trade-in."

Those consumers who spin their odometers around multiple times and just want a car for reliably and safely getting from point A to point B are less likely to be affected, but those who regularly trade their cars in for the latest features and design may feel the pinch.




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