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American consumers have continued to pile on debt over the last year, but many may now be reaching their breaking point. This would be particularly bad news for new car sales, which are a major driver of economic activity. The average age of vehicles on the road has expanded to a new record of 12.5 years, indicating many are more willing to stick with their current car for longer, or buy a used vehicle, instead of purchasing new.

Delinquencies on existing auto loans are already rising and further financial stress could be applied by the return of student loan payments later this year, which can add nearly $400 to a monthly budget. That’s more than half of the value of the average new car’s monthly payment, which hit a record high in the first quarter. Longer lifetimes for cars, however, could boost repair shops, auto parts retailers, and other aftermarket businesses in the automotive space.

Related Stocks: Ford Motor Company (F), General Motors Company (GM), Toyota Motor Corporation (TM), AutoZone, Inc. (AZO), O’Reilly Automotive, Inc. (ORLY)

The American automotive market can be a key gauge for the health of the US economy. In the 50-plus years of available data from the Commerce Department, cited by the Wall Street Journal, there has never been a recession in the US without a decline in new vehicle sales. At first glance, that would seem to assuage some fear of a looming economic contraction, as the latest data from the US Bureau of Economic analysis shows sales of light vehicles including autos and trucks have risen by at least 5.0% YoY throughout every month since last August. In April, annualized automotive sales were clocked at 15.91 million, up 11.4% from 14.28 million in the same period last year.

The issue, however, is that cars are staying on the road much longer today than at any time in the past. The average age of light vehicles on the road in the US is now at an all-time high of 12.5 years, up three months from 2022, according to S&P Global Mobility. Two decades ago, the average age was just 9.7 years. Americans are clearly willing to hang onto their current vehicles longer today than in prior years (or buy used), and greater financial stress could…

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