Lang Aftermarket iReport: Double-digit 2020 ‘mileage plunge’

“Annual mileage on U.S. roads will plunge by more than 12% during 2020, according to the latest projections by Lang Marketing. This will be only the seventh year since WWII in which U.S. mileage has fallen. The 2020 percentage plunge in mileage will be more than six times larger than any previous annual driving decline over the past 65 years.

“Although monthly 2020 mileage deficits have narrowed (compared to last year) since the 40% collapse in April driving, Covid-19 will continue to slow the recovery in miles driven for many more months.”

— Jim Lang, publisher, Lang Aftermarket iReport

Forces Reducing Mileage

Reduced annual mileage during 1974, 1978, and 1979 was the result of oil crises that abruptly increased gas prices at the pump and caused fuel rationing across many areas of the country.

The story was different during 2008, 2009, and 2011, when the Great Recession of 2008, and the economic conditions that followed it, reduced annual mileage for an extended period. Unlike the three mileage downturns in the 1970s, there were no gas shortages. Lower annual mileage between 2008 and 2011 was the direct result of economic factors.

2020 Mileage Plunge

The 2020 mileage plunge is different in several important ways from the six earlier cases of lower annual driving.

First, the abruptness and depth of the 2020 mileage decline was much greater than anything previously recorded.

Second, there was no shortage of gasoline and pump prices remained low during the months following the outbreak of Covid-19.

Third, shutdowns mandated in many regions of the country have caused widespread economic and social changes unrelated to any conditions that existed prior to the onslaught of Covid-19.

Magnitude of 2020 Mileage Decline

The reduction in 2008 driving was the largest annual mileage decline since WWII. The mileage reductions in 1974, 1978, and 1979 (caused by oil crises) averaged less than 1.0%. Annual mileage fell 1.8% in 2008, followed by an average 0.6% decline in 2009 and 2011.

The situation has been much different in 2020, when mileage plunged 28% in March and even further in April, down 40%.

Although 2020 monthly mileage has since improved, it remained at double-digit deficit levels through August. The driving decline in September fell to 8%, but it has remained high year-to-date at 15%.

Driving Decline Duration

Driving retreated for a single year during the first oil crisis (1974), followed by a two-year drop (1978 and 1979) during the second oil crisis.

The mileage impact of the Great Recession of 2008 covered three years, with mileage falling in 2008 and 2009, followed by another drop in 2011 after a modest rebound in 2010.

While it is unclear how long the current mileage decline will persist, Lang Marketing expects December 2020 mileage will be down significantly from last year, despite the monthly mileage decline recently narrowing versus last year. Lang Marketing projects that the annual 2020 annual mileage plunge will top 12%.

Aftermarket Product Impact of Lower Mileage

The impact of the 2008 Great Recession can provide some hints of what the consequences might be of reduced 2020 mileage on aftermarket product sales.

The 1.8% reduction in 2008 mileage resulted in 1.9% fall in light vehicle product volume, while the 0.6% decline in 2009 driving triggered a 0.5% retreat in light vehicle product sales at user-price.

Although 2011 annual mileage fell 0.6%, total aftermarket product volume climbed 2.9% during the year, propelled by an increase in the number of vehicles in operation (the first growth in more than four years) and a surge in vehicle average age.

2020 Aftermarket Product Reduction

While the impact of the 2020 mileage decline is not yet clear, there is no doubt that the reduction in car and light truck product sales will be record setting.

Six Major Takeaways

  • Prior to the onslaught of Covid-19, mileage on U.S. roads had declined during only six years since WWII. See the just-released 2021 Lang Aftermarket Annual for information on changes in annual mileage and aftermarket yearly product volume over the last 10 years.
  • The annual mileage reductions prior to 2020 had different causes. Oil shortages and high pump prices triggered a drop in driving during 1974, 1978, and 1979, while economic conditions undercut annual mileage in 2008, 2009, and 2011.
  • The plunge in 2020 mileage was more abrupt and deeper than anything previously recorded in the U.S. It was not triggered by oil shortages or higher gas prices. Rather, it was caused by the shutdowns mandated across many regions of the country in response to the onslaught of Covid-19. What began as a health emergency has quickly metastasized into an unprecedented economic crisis that continues take on new features and dimensions.
  • Prior to 2020, the largest annual decrease in mileage during any of the previous six events was the 1.8% drop in 2008 mileage. All reductions in annual mileage, prior to 2020, averaged less than 1%.
  • The 1.8% drop in 2008 mileage resulted in a 1.9% decline in aftermarket product volume. Until then, these were record annual declines for both mileage and product sales.
  • The double-digit plunge in 2020 annual mileage will cause a drop in aftermarket product volume that will be at least four times greater than any annual reduction in car and light truck product sales over the past 65 years.

Copyright 2020 by Lang Marketing Resources, Inc.

NOTESpecial thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.