Historically, the older segment of the population has not been aggressive in the new car market; however that seems to be changing with the baby boomer generation. A new study performed by the Transportation Research Institute of the University of Michigan has found that people aged 55 to 64 outbuy the 35 to 44 year olds who were mostly likely to buy new cars four years ago.
Boomers aren’t following in their parents’ footsteps, dropping out of the new vehicle market as they age. The numbers suggest that the boomers still care very much about what they drive, and they still have plenty of money to spend on new vehicles. The auto market pours millions of dollars into courting their children, who are proving somewhat elusive. Perhaps changing tactics and targeting the older market could yield a much higher return on investment.
The author of the study, Michael Sivak, expressed that point of view. “You shouldn’t be chasing the younger people, you should be looking at the older people. Baby boomers are trying to extend their youth as long as they can, both in terms of taking care of their bodies and in their expenditures.”
The recession meant that people born during the post war boom from 1946 through 1964 lost some savings and retirement money, says Lacey Plache, who is the chief economist for Edmunds.com. She says, “We can expect these people to be in the workforce longer, and, as a result, buying cars longer.”
Boomers have a difference mindset about what they drive. They grew up in a time when what people drove defined them. Cars were signs of status, success and prestige. Young people just don’t see cars that way; to many of them a vehicle is simply transportation.
John Wolkonowicz, auto historian and former product planner for Ford Motor Company, explains it this way: “The care was a phenomenon of the 20th century. For people who grew up and lived in the 20th century, the car was freedom, it was status, it was an extension of you, a visible expression of you and your personality. A 20-year-old doesn’t see the car the same way.”
The interest in driving just isn’t what it used to be. Only 79 percent of people aged 20 to 24 even had a license in 2011. In 1983, that number was 93 percent according to the Michigan study. And the boomers? They’re still showing up at DMVs everywhere to retain their driver’s licenses. In 2011, almost 93 percent were licensed, whereas in 1983, only 84 percent had them. This also explains why most new vehicle buyers in 2011 were 55 to 64 years old, and the youngest buyers made up the lowest percentage of the market. The study found that even consumers aged 75 and above bought more new cars than those 18-24 and 25-34.
Carmakers have spent stunning amounts of money marketing “youth vehicles” that ultimately end up being snatched up by the boomers. An example of this is the Element crossover, which had rubber floors that could be hosed clean by active, on the go young people. Instead, boomers loyal to the Honda brand bought the Element steadily until the model was discontinued in 2011.
Marketing researcher for Honda, John Morel, sums it up this way, “One of the dirty little secrets of the auto industry is all these cars are positioned in advertising and public relations as something a 25-year-old will buy. But your propensity to buy a car at 25 is roughly a quarter of what it is at age 65. By definition, very few cars sell in high volume to 20-somethings.”
Auto makers seem to be getting the message. Toyota has created the Venza sport wagon especially for the older driver, making it easier to get in and out of than the traditional SUV. Toyota’s TV commercials focus on the older drivers, depicting them as active, fun-loving and adventurous. Sales of the Venza rose 11 percent last year.
Ford generational marketing executive Susan Pacheco said it best: “Boomers have done everything different than previous generations, so why would we expect their retirement to be any different? Their automotive needs are what we base our product strategy around. If you don’t market to them, it would be a very big mistake.”