We all know that America's auto market is on a roll. But have you ever stopped to wonder who's leading the charge back to showrooms?
J.D. Power and the AARP have. And they found out -- not too surprisingly -- that Baby Boomers deserve most of the credit, along with their parents and siblings from the Silent Generation.
We've seen similar stats before. In fact, just two years ago, Power and the AARP showed that shoppers over 50 accounted for 62.5% of all auto sales.
According to J.D. Power and Associates' Auto Offline Media Report, Winter 2012, the 50+ demographic fuels 62.3% of all U.S. car sales. True, the figure is essentially unchanged from 2010, but it's still far above the 39% attributed to folks over 50 back in 2001.
Even more impressive, older Americans account for a whopping 67% of sales among Detroit's Big Three, 60% among Asian manufacturers, and 56% for European brands. (The top two criteria for 50-plussers? Fuel economy and reliability.)
Interestingly, the Boomer-plus crowd is particularly fond of hybrids. They're responsible for 72% of all Hyundai Sonata hybrid purchases, 69% of all Honda Civic hybrids, 66% of Toyota Prius sales, and 68% of Ford Fusion hybrid purchases.
In fact, if you look at all 286 models studied by Power and the AARP, 80% depend on buyers 50 and older for most of their sales.
The facts behind the facts
But why are older Americans driving the auto market? Here are a few good guesses:
- Generation Y (roughly, those age 18 - 34) has encountered a tough job market. In fact, Millennials (as they're sometimes known) face an unemployment rate of 9%, compared to the national average of 8.2%. As a result, Gen Y shoppers account for just 13% of all auto sales today -- down from 24% in 2001.
- Furthermore, as we've often said, Generation Y isn't all that interested in cars. Faced with a choice of a monthly auto note or a good data plan for their smartphone, they'll often choose the latter.
- But what about their older siblings? What about Generation X? It's true that Americans age 35 - 49 entered the workforce well before the Great Recession, but the fact is, Generation X is pretty small. It's nothing compared to the Boomers and the Silent Generation. Thanks to a larger cohort and lengthening life expectancies, folks over 50 now account for 42% of the population.
- When you take into consideration the strong economy that's persisted for much of the Boomers' lifetimes -- and the wealth accumulation that's come with it -- Boomers' buying power far outshines that of their younger counterparts. Savings rates in America might not be what they should, but Boomers have stashed away more than the whippersnappers behind them.
You know what the irony is? According to Mark Bradbury at AARP Media Sales, only about 10% of America's marketing budgets are spent on older Americans. So, why are automakers spending all that dough to attract younger shoppers when it's their parents and grandparents who are signing on the dotted line?
Some would say that older Americans have already made up their minds about which brands they prefer to drive. And many folks at ad agencies would rather spend their time working on inventive, edgy campaigns aimed at younger eyeballs.
But the truth of the matter is that some automakers may be missing the ball. In this touch-and-go economy, they'd be wise to take a long, hard look at their game plan.