This past decade has been an especially tough one for the automotive industry. Now, as the American economy is recovering, auto makers are finding that baby boomers are responsible for a very large chunk of their business. According to research from the University of Michigan’s Transportation Research Institute, consumers aged 55 – 64 were responsible for 23 percent of all new car purchases, which those aged 45 – 54 made up 26 percent of the sales.
These figures aren’t just coincidence – there are a number of factors in play which are causing this generation to be such good customers. Here are three reasons that potentially help explain why so much of the automotive market is filled by baby boomers:
1. The Sheer Number Of Baby Boomers
The first reason that it makes sense for such a high proportion of purchases to be made by baby boomers is that there are so many of them. According to studies on the subject, there are well over 70 million baby boomers in the United States. They make up the second largest age demographic in the United States, following millennials born after the year 2000. This provides a foundation for the other potential explanations to even further push baby boomers into the position of top consumers in the automotive market.
2. Financing Is Available For This Generation
For older adults such as baby boomers, financing is often much more available than it is for the younger generations. This is due to the fact that a much larger percentage of baby boomers are financially secure than their less-aged counterparts. Not only have they generally advanced into higher-paying jobs in their careers, but they likely have many more assets stashed away for retirement. The type of loan security that comes along with many baby boomers makes lenders much more likely to approve them for loans with favorable terms. On the other hand, many members of younger generations are feeling the effects of the recent recession more strongly and face greater challenges in obtaining funding for their automotive purchases.
3. They May Be More Optimistic About The Future
To put it simple, this isn’t the first trip around the sun for baby boomers. Despite the economic recovery we’ve seen over the past few years, the younger generations still seems more hesitant about making major purchases than baby boomers are. While many members of generation Y were unsure whether the economy would ever be the same, baby boomers had already been through their fair share of economic downturns. From recessions in the 1970’s and 80’s to the dot-com bust early last decade, they have seen ups and downs and understand that the economy will always be cyclical.
One thing is for sure – baby boomers are one of the biggest factors aiding the recovery of the nation’s automotive industry. Despite the proven statistics, many automobile companies are still targeting their advertisements towards a younger generation X and generation Y crowd. As a growing number of these companies begin to understand the importance of baby boomers in their industry, we are starting to see a shift in focus in order to increase their market share among the nation’s largest demographic. Thanks to the sheer size of the baby boomers, the financial security that they possess and their outlooks on the future of the economy, this generation represents a crucial market segment to automakers.
David Lye is the founder of fincar.com.au. He has always been passionate about cars, finances, businesses and enjoys sharing tips with others.
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