Boomers Boom Followed By Car Bust
Consulting firm Alix Partners predicts a slowdown of U.S. auto sales. The study, reported at Reuters, cites the usual suspects, such as lingering high unemployment, increased costs and more people driving less. It then touches on something that is very basic, but often overlooked: Sales are driven by the number of potential buyers. If there are fewer buyers, there will be fewer buys. New cars are bought in certain age groups, usually somewhere at around 35 and up. As the boomers are going out to pasture, there simply will be fewer potential buyers.
The peak of car demand in the early 2000s coincided with a population peak in the new car buying age. Likewise, a long valley in the new car buying age will pull down sales for decades until a peaklet of today 20 year olds starts buying new cars.
In the U.S., the effects of these population peaks and valleys are expected to be not as harsh as in Europe and Japan, where births dropped drastically beginning in 1970. This valley is now 40 years old, and it will impact car sales for a long time.