Boomers May Be The Only Ones Who Can Afford New Cars



Auto execs may soon be bragging about raising the age of their average buyers.

Back many more years than I would care to admit, I sat through my share of press conferences where auto execs would brag about lowering the average age of their buyers from somewhere in the 50s down into the 40s.

The age factor back then was particularly acute among the domestic brands, which saw the average of their buyers climb while imports were peeling away their younger buyers. Much of this was also due to the fact that the product pitched by the domestics, thanks to their floaty rides and less-than-compact packages, did seem geared more towards those eligible for AARP membership than not.

Things change. The products on the market today have a more universal sensitivity to them. There are Ford and Chevy models that appeal to Honda and Toyota buyers and vice versa. The Detroit automakers are not necessarily typecast as builders of your father's Oldsmobile anymore.

So it's interesting that a new study by the University of Michigan suggests that the worm has turned and auto execs may soon be bragging about raising the age of their average buyers. The Transportation Research Institute at U of M has found the peak probability of buying a brand new automobile is now in the 55-to-64 age group. This is a significant shift away from a study four years ago that found the 35-to-44 set most likely to buy new cars. We reported these findings earlier in the week, but they deserve a closer look.


Matt DeLorenzo is the former editor-in-chief of Road & Track and has covered the auto industry for 35 years, including stints at Automotive News and AutoWeek. He has authored books including VW's New Beetle, Chrysler's Modern Concept Cars, and Corvette Dynasty.



Of course, a lot of this can be attributed to aging baby boomers, the proverbial rat working its way through the snake.

Two years ago, the leading demographic for purchasing a new car were 45-54 year old buyers, who accounted for 26 percent of the market, compared to the next bracket up, 55-64, who were responsible for 23 percent of sales. Study author Michael Sivak also found that this oldest demographic had the highest new car per driver ratio – one vehicle bought for every 14.6 drivers – than any other segment.

This oldest demographic had one vehicle bought for every 14.6 drivers.

"The findings suggest that marketing efforts that focus on drivers 55 to 64 years old should have the highest probability of success per driver," Sivak said. "The emphasis on this relatively older age group is further supported by the expected continuation of the graying of the population and the consequent continuation of the increase in the number of older licensed drivers."

This trend has many factors driving it – better health and longer lifespans of aging Americans and the fact that many in that age group are at their peak earning years or recently retired. The other demographic groups, especially the younger ones, are not as well insulated from an uncertain economy and find that the rising costs of new cars make buying a new one more difficult. And in the youngest demographics, we have seen teens putting off getting their drivers' licenses later and later. Add to that student loan debt and difficulty getting that first job, and you'll find that most under 30 consider the idea of buying a new car pretty far-fetched.

Most under 30 consider the idea of buying a new car pretty far-fetched.

But, even as the new car buying population grays, don't expect to see execs running out touting about their conquests of the geriatric set any time soon. A long, long time ago, the industry wisdom held that you can't sell an old man's car to a young man, but you can certainly sell a young man's car to an old one.

Cars are and will continue to be a fountain of youth, no matter the demographic. So the more the market may change with older buyers driving new car sales, the more things on the advertising and product front will look the same.


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    • 1 Second Ago
  • 117 Comments
      WhoMeWhere
      • 1 Year Ago
      Thank you for stating a horrible but true fact, My generation cannot afford a new car much less rent in this economy. Add in paying off student loans and every last penny is gone
      BenC
      • 1 Year Ago
      I'm 25 and I've been saying this for years. It is non-sense to target cars towards the younger crowd. No matter what, they are naturally going to be less affluent than the older crowd, and less able to buy cars. When the Honda Element came out, C&D said Honda was targeting 22 year old jobless males. Why would you build a car for someone with no job? Pure stupidity. At least the industry is waking up...
      Brett Fisher
      • 1 Year Ago
      Add in 30 years of stagnant average wages and inflation also.
      mawhalen53
      • 1 Year Ago
      "...Add to that student loan debt and difficulty getting that first job, and you'll find that most under 30 consider the idea of buying a new car pretty far-fetched." This, I think, is the driving reason for the buying trend.
      Edward
      • 1 Year Ago
      The gent in the photo is not a boomer. He's in his late 70's to late 80's.
        johnm
        • 1 Year Ago
        @Edward
        May 8, 1945 = 69 years ago. That's pretty much what you boomers look like to everyone.
      x19x19
      • 1 Year Ago
      Pretty obvious. 20 and 30 somethings with 100K of student loan debt. A flat economy. Declining average wages. No wonder seniors are the predominant group with enough disposal income to purchase new cars.
        Gabbo
        • 1 Year Ago
        @x19x19
        Student debt + liberal arts degree = idiots
          superchan7
          • 1 Year Ago
          @Gabbo
          Even with a more employable degree in maths/science/engineering, the job market worldwide is not what it used to be. My friends, especially the ones burdened with enormous US school loans, face a long uphill battle to being able to afford new cars, let alone the luxury cars and fancy suburban houses that their parents easily attained.
          superchan7
          • 1 Year Ago
          @Gabbo
          Not "easily" in the sense that they didn't work hard, but in the sense that their era saw smooth career and economic growth.
          • 1 Year Ago
          @Gabbo
          [blocked]
      fred schumacher
      • 1 Year Ago
      This is the age group that is at the peak of earning power, no matter which "generation" it is, and so is best able to buy a new car. The fact that the average price of a new car sold in America is now over $30,000 indicates that it is not a general cross-section of the public buying new cars but those at the upper end of the income scale. Automakers like selling to that demographic, but there would be more buyers with lower income if manufacturers put an effort into offering more sub - $15,000 vehicles. That's a harder price point at which to make a profit, but it is possible. Chrysler made a healthy profit on Neon sales.
        Chris
        • 1 Year Ago
        @fred schumacher
        I am not convinced that offering more sub-$15,000 vehicles would result in more new car sales. People tend to expect a lot out of their cars, and if they can't afford what they are looking for in a new car, then they'll go look at the used car market. It's the average new car buyer is willing to plunk down $30k for a new car,and that you be hard pressed to find anything made in the last few years that doesn't come equipped with an automatic transmission, power locks, power windows, a sunroof, navigation system, and leather seats. They are out there, but it seems people would rather option them out to the gills. At the same time, I see a lot of lower income folks driving around in old SUVs and luxury cars, vehicles that were nice in their day, but not worth much now. Some prime examples of what I am talking about are old 90s Tahoes, Suburbans, Silverados, Caprices, Cadillacs, Lincolns, Camaros, Mustangs, etc.
        superchan7
        • 1 Year Ago
        @fred schumacher
        The average new car price of $30,000 either reflects a very poor method of averaging, or very poor judgment on American buyers who need to 1) take out large loans to be able to afford that kind of car, or 2) eat horrible depreciation on $350 BMW leases.
      lostjr123
      • 1 Year Ago
      If they want to sell to codgers they need to ditch the "coupe sedan" trend. Too difficult to get in and out of (for this codger).
      BG
      • 1 Year Ago
      I think the cars are already oriented to codgers. Feel the over-boosted power (now usually electric) steering. It reminds me of the Ford LTD feel from the 1970s, 1-finger steering. Transmissions? No matter what they call them, most are some form of technology that the driver can treat like an automatic. Plush and luxurious interiors? Not as baroque as the LTD but back again.
      turkeythundergod
      • 1 Year Ago
      As someone with decent income in their mid 20s, I would tend to agree, I have no interest in buying a new car. A) The money I make is VERY limited. Had I gotten out of school in the 90s or early 00s, then I'd be making more, with better work, more stability, etc. Meaning right now, I'm all about value of a car - which means I want a slightly used car. B) New car prices are outrageous, and initial depreciation hits are HUGE. I'll let someone else take the hit. C) New cars that don't suck are EXPENSIVE. I have no desire to own some little econobox, a boring midsize, etc. I also don't want some little "sport compact" that isn't really sporty. So the good sports cars are excessively priced. D) New cars today aren't as good of offerings as lightly used cars. The "best" low priced new car is the GenCoupe, but even a nicely equipped V6 model is $30k+. For that money, I could get a much better used G37S, a used 370Z loaded, etc. Looking at cars under that price you've got the FR-S, which is simply not as good as an all around car as a used RX-8. So yeah, I'm not about to buy a brand new car. I'll stick to lightly used cars, let some other person with crappy credit or an upside down trade take the depreciation hit from a brand new car.
        Carlos
        • 1 Year Ago
        @turkeythundergod
        Initial depreciation is no longer huge. For models more recent than 2009 (after production cuts hit hard), used models are not much cheaper than new, the way they used to be. I always used to be an almost-new car buyer, but I can't justify it anymore. Now it's either 5+ years old, or brand new. It's a strange change.
        Xantia10000
        • 1 Year Ago
        @turkeythundergod
        I agree with many of your points. One thing that strikes me as interesting is part D, when you compare used premium/focused sporty cars with non-premium new cars. I remember reading somewhere, with a slight exaggeration to make a point, that Civic's biggest rival is not Corolla but a used 3-Series or A4. Younger generations are more demanding about their purchases and more than ever might identify with aspirational brands, like Apple, Nike, et. al. Nevertheless, I still think there is an uptick in fun, relatively affordable cars. Maybe you might consider my definition of 'sporty' too liberal (i.e., not only RWD), but I'm impressed with Focus & Fiesta ST, Fiat 500 Abarth, the Toyota-Subaru twins, plus perennials like GTI/Golf R, Miata, and MINI Cooper S. Still, most of these rides land in the $20 - $30k range (or up to $60k if you go whole hog on the MINI).
      789dm
      • 1 Year Ago
      No wonder Toyota making a lot of money most of their cars are for baby boomers who had bad taste of domestic cars in the past. Now I understand why Honda is slowly turning into Toyota.
      Gina
      • 1 Year Ago
      What would save the auto industry is making cars that don't rust in 3 years! Making cars with REAL GLASS headlights and making sure that parts are sturdy and not made out of cheap plastic that break easy. I have to pay 1,700. for a stupid plastic part that tells the a/c and heat where to go. It broke on it's own last winter and Ford must have known it would do that because they made it so if that happens, the air will default to the defroster. I can only get a/c or heat out my defroster and that doesn't heat or cool the van off! I shouldn't have to pay big bucks that I don't have to repair THEIR cheap parts! The auto industry can be saved if people knew they were getting a car that wasn't going to have many recalls (I'm on my second recall) and that they wouldn't rust out in a few short years! I take care of my cars so I know it's not from the lack of care on my part. It's from poor designs that allow water to pool in areas like the back quarter panels and under the sliding van doors and both front doors. I also noticed that the last 2 Fords I bought have the same electrical problems. That's obviously BAD DESIGNS AND POOR WORKMANSHIP! Either that or someone on the line is a drunken screw up!
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