Shaping a Bleaker Future: Generational Trends in New Car Ownership
There has been plenty of doomsday prophecies surrounding the automotive industry in the last year, based largely upon the assumption that younger drivers are less willing to support it or simply cannot afford to. Stupid, right? Not really. While the direness of the situation is often exaggerated, plenty of evidence exists to underscore the impending troubles of the new car market. Whether it’s because those in their salad days don’t care as much about cars as their elders or simply have less disposable income (hint: it’s the second one), real change is coming for OEMs.
Younger shoppers are noticeably more likely to purchase used vehicles than their more venerable contemporaries are, but “young” is a relative term — especially in this instance. According to a recent study, 53.7 percent of prospective buyers under forty plan on getting a used car the next time they need wheels. For those over forty, that number is 49.7 percent. As you’d expect older people to buy more new cars, this much of a disparity at mid-life is significant.
The survey, conducted by AutoList, surveyed over 9,000 vehicle owners to determine their future buying preferences. Its findings concluded that 38 percent of all buyers planned to purchase a used vehicle, compared to the 34 percent who anticipate buying new and 27 percent who hadn’t made up their mind.
Data compiled by the U.S. Federal Reserve shows the average age of new vehicle buyers increasing by almost 7 years between 2000 and 2015, with the largest increase occurring during the Great Recession. While anecdotal articles like to assume the overall shift is simply down to a Millennial apathy toward consumer goods, new vehicles bought by 16- to 34-year-olds declined by about 6 percent during that time period. Meanwhile, the number of used cars bought by those between the ages of 35 and 49 dropped by 9 percentage points.
Those numbers have stabilized in the years following the recession, but the likelihood of those younger groups filling the gap as older generations age out of the market is debatable. There’s no assurance they’ll be ready to bolster the domestic market when their parents become too old to drive. It likely won’t put swaths of auto manufacturers out of business but, if the start of 2017 is anything to go by, there should be an extended cooling off period.
According to the AutoList survey, newer generations not only want to buy used, they also plan to own their cars for a shorter period. Roughly 60 percent of the the youngest demographic and 47 percent of millennials expect to own their next vehicle for less than five years. Comparatively, the age groups you’d expect to purchase newer vehicles more often — and have the funding to do so — want to hang on to their vehicles a little longer. Only 40 percent of Gen Xers and 39 percent of Boomers plan to replace their current rides at the mid-decade mark.
Breaking the demographic data down by brand indicates some automakers might have it better than others, assuming brand loyalty holds at current levels. The majority of Cadillac, Audi, Mercedes-Benz and BMW owners claim they intend to purchase a new vehicle within five years. Subaru’s immediate future also looks bright. While 73.6 percent of its clientele stated they’ll be keeping their Subie for more than five years, they also said they’d replace it with a new model.
Luckily for Subaru, the brand yields some of the highest repeat business on the market.
[Image: AutoList]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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I just turned 47 years old and, *ahem*, "All the best cars have already been built".
@Big Al--Your Mazda truck should easily make it to 16 years old and beyond with proper maintenance. I currently have a 99 S-10 with a 2.2 I-4 5 speed manual that is going on 19 years old and still looks new with original paint and still runs like new. I am a stickler for maintenance and would rather do preventative maintenance before something happens. My wife had a 77 Accord for 17 years and I had a 77 Monte Carlo with swivel buckets for 18 years. I also have a 2008 Isuzu I-370 crewcab 4x4 with heated leather seats and a tow package with 29k miles which I have had since new. My wife has a 2013 CRV with all wheel drive full loaded. I learned from my Great Great Uncle and my maternal Grandfather how critical proper maintenance is. My maternal Grandfather was a farmer and could work on anything and built houses and barns by himself. My Grandfather had an old Pontiac during the Great Depression that he overhauled the motor several times and did his own maintenance just to make it last during those times. My Great Great Uncle was the first pilot to fly from Kelly Air Field and trained pilots during WW I on the Curtis Jenny Bi-planes. Uncle Hughes as we called him was a barnstormer and once built his own car during the Great Depression using parts out of a junkyard. Unfortunately I was too young to learn from my Great Great Uncle and Grandfather but both were great men and both were totally self-sufficient and were literally jack-of-all trades. I never heard them say anything negative about anyone and both were happily married and good providers. Many younger people do not have the desire or knowledge to work on their own vehicles or do anything that resembles that. There are some younger people and those are usually the ones that were not given anything and had to work hard for everything. I don't see as bleak a future as some because I believe there are just enough of those hard working self motivated younger generation to carry on. I do believe the influence and example that your parents, grandparents, and uncles and aunts give you are important and last a lifetime. As for the auto industry it is like any industry in that it will be in a state of constant change and it will have to adapt in order to survive. An auto company cannot just be in the business of making and selling vehicles but it needs to be in the transportation business as well. The transportation business encompasses such things as self driving cars, car rides, and rental services for those who live in urban areas and do not own a vehicle. There are other services as well which have not even been developed. More efficient production of vehicles with more robotics and more sharing of platforms with more standardization.