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For generations, auto buying declined for consumers entering their golden years.
Now, Baby Boomers are refusing to go gently into that car-buying night. The 55- to 64-year-old age group, the oldest of the boomers, has become the cohort most likely to buy a new car, according to a recent study by the University of Michigan’s Transportation Research Institute. Graying boomers replaced the 35- to 44-year-old age group, the most likely to buy four years ago.
The findings show that boomers’ automotive passions—and pocketbooks—have plenty of miles left. The study also suggests that the billions the auto industry spends to woo the elusive Generation Y might generate a higher return on investment if they were aimed at their parents. “You shouldn’t be chasing the younger people, you should be looking at the older people,” says Michael Sivak, author of the study. “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 dicey economic times have extended the working years and peak earnings period of the 76 million Americans who were born during the post-World War II birth boom from 1946 through 1964. “People’s nest eggs were decreased, including their retirement portfolios, by the recession,” says Lacey Plache, chief economist for auto researcher Edmunds.com. “We can expect these people to be in the workforce longer and, as a result, buying cars longer.”
There’s also a strong psychological motive driving boomers back to the dealer’s lot year after year: Their automobiles define them. “For people who grew up and lived in the 20th century, the car was … a visible expression of you and your personality,” says John Wolkonowicz, an automotive historian and former Ford Motor product planner. “A 20-year-old doesn’t see the car the same way.”
In recent years, fewer young people are interested in driving. Just 79 percent of people between 20 and 24 had a driver’s license in 2011, compared with 92 percent in 1983, according to the Michigan study. Conversely, the oldest boomers are trooping down to the Department of Motor Vehicles in growing numbers to remain licensed to drive. Almost 93 percent of those aged 60 to 64 had a driver’s license in 2011, up from 84 percent in 1983.
That helps explain why consumers aged 55 to 64 had the highest rate of vehicle purchases in 2011 and the youngest age groups had the lowest. Even consumers 75 and older bought cars at a higher rate than 18- to 34-year-olds, the Michigan study found. “I have a son who lives in San Francisco. When I get a new car, and I tell him what I got, he couldn’t care less,” Sivak says. “To him, it’s a means of getting from A to B. He goes to great lengths about taking a BART [Bay Area Rapid Transit] or bus, even though it takes him an hour longer. He does have a car but uses it very rarely.”