Last year, Dave Rodham bought two Ford (F) Mustangs—a red one because it looked cool and a white one with a big V-8 engine because it sounded cool. They were his 50th and 51st car purchases. “I have to have a new car every year and a half to two years,” explains the 63-year-old, of Virginia Beach, Va., who says he pays cash. “After I retired 10 years ago, I didn’t have anything else to do, so I went out and bought new cars.”
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.”
Automakers have spent billions coming up with youth-oriented vehicles and marketing campaigns that ended up selling better to boomers. A decade ago, Honda Motor (HMC) rolled out the boxy Element sport-utility vehicle, with clamshell doors and rubber floors that could be hosed out by on-the-go Gen Xers. Instead, Honda’s boomer loyalists bought the car until it was discontinued in 2011. “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,” says John Morel, a market researcher for Honda. “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 twentysomethings.”
Toyota Motor’s (TM) Scion line, marketed to Gen Y, has also sputtered. Scion sales fell 9.3 percent in July after a 25 percent plunge in June and are down 1.8 percent for the year, at 41,261, according to researcher Autodata. Toyota sold 73,505 Scion models in 2012, down more than half from a peak of about 173,000 in 2006. Scion still has a devoted follower, however, in Michael Leek, a 60-year-old city planner in Shakopee, Minn. He drives a “Cherry Coke” red Scion tC that he upgraded with gray pinstripes, a lowered suspension, and a growling, chrome-tipped exhaust. Now he’s shopping for a new Scion FR-S sports car. “City planners ought not to like cars as much as I do, and guys who are 60 should be getting over it, but I haven’t,” Leek says.
Toyota is embracing its boomer buyers with the $27,850 Venza sport wagon, which is easier for aging drivers to climb into than a high-riding SUV. Toyota in 2011 pitched the Venza with TV commercials that “made fun of the millennials” for believing they remained the “center of the universe” after they left the nest, says Bob Zeinstra, the automaker’s national ad and strategic planning manager. One spot depicted a young woman alone in her apartment, bragging about her Facebook friends and fretting over her lonely parents, who are shown horseback riding and mountain biking. “Boomers are looking for vehicles that help them stay active and young, because that’s the image they want to have of themselves,” Zeinstra says. Venza sales rose 11 percent last year, to 43,095. Deliveries this year through July totaled 23,498, about the same as in the prior-year period.
General Motors (GM), Ford, and Chrysler Group (F:IM) have had a troubled history with boomers, who migrated to Japanese and German models in the 1980s after being let down by poor quality from Detroit. That trend is turning, with U.S. automakers fielding some of their best cars in a generation, such as GM’s Chevrolet Impala sedan and Ford’s Fusion family car.
This year, Ford has sold 23 percent of its models to 55- to 64-year-olds, outpacing the total auto industry, which sold 22.2 percent of all vehicles to that group, according to Amy Marentic, a Ford marketing manager, who cited data from researcher R.L. Polk. But the automaker says buyers nearing retirement no longer just buy the big boulevard cruisers their parents coveted for their golden years. Ford’s Escape, a small SUV, has become a boomer magnet since a redesign in 2012 made it more carlike and less rugged-looking, Marentic says. The average age of Escape buyers this year is 52, up from 51 in 2012. And 45 percent of the Escape’s boomer buyers opt for the fully loaded Titanium package, starting at $29,100. “Boomers have done everything different than previous generations, so why would we expect their retirement to be any different?” asks Susan Pacheco, a Ford generational marketing executive. “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.”
The bottom line: Consumers aged 55 to 64 are far more likely to buy a new car than drivers under 34. Automakers have taken notice.
