Baby Boomers Shift Car Buying ChoicesBy Michelle Krebs March 19, 2010
The gas-price spike of 2008 followed by the economic disaster of 2009 has prompted baby boomers to re-evaluate their vehicle choices.
"It was once thought that when baby boomers could put college tuition payments and other parenting expenses behind them, they would reward themselves with expensive luxury cars," commented Edmunds.com Senior Analyst Michelle Krebs, who presented on the topic to the Seventh Annual What's Next Boomer Business Summit in Chicago today. "But that was before economic catastrophe struck. Now that their kids can't find jobs and their nest eggs have shrunk, they are rethinking everything, including their vehicle choices."
Their vehicle choices fall into a trio of sweeping categories: efficiency, lifestyle and indulgence.
Despite their advancing age and the emergence of the giant Generation Y, baby boomers continue to be an extremely powerful force in the marketplace. They account for a third of the driving population and almost half of all new vehicle purchases.
Yet, many share the same consciousness and car choices as Gen Yers. By choice or necessity, they are downsizing, streamlining and simplifying all aspects of their lives, from their house to their cars.
They are choosing vehicles that allow them to save money and gasoline while presenting an environmentally conscious image. A smaller vehicle not only means a smaller gas bill but likely also a smaller monthly payment and cheaper insurance - but not much sacrifice in the driving experience, since today's compact cars are stylish and can be loaded with features.
Like their younger counterparts, many are moving to the cities where parking spots are at a premium, mass transportation exists and only a single car is needed per household. And environmental consciousness has taken hold. In addition to saving personal resources, the tendency of this group is to use fewer resources in total.
Some are going all green, with the Toyota Prius the poster child for the movement. But many more choices are on their way, from the all-electric Nissan Leaf to the extended-range Chevrolet Volt to new diesels, hybrids and electrics planned by virtually all automakers.
Another segment within the efficiency category is small and stylish. Small is becoming very "in." It always has been in Europe and other countries. Finally, due to changing consumer values and federal regulations on emissions and fuel economy, it's becoming a trend in the U.S. Small and stylish is the new black dress of autos. Not the econoboxes of old, these are well-designed, well-outfitted head turners, like the Ford Fiesta, Mini Cooper and Honda Fit, to name a few.
Other baby boomers -- especially those who often carry the grandkids or have hobbies that require hauling capability -- are not ready to give up the functionality of a larger vehicle. Since their SUVs have become politically incorrect, many are buying crossovers -- which have the interior space and versatility of an SUV but ride on the architecture of a car instead of a truck and therefore get better fuel economy and provide better handling.
Of course, some baby boomers are rewarding themselves - but luxury leaders Audi, BMW, Cadillac, Lexus, Lincoln and Mercedes are not the only automakers attracting their attention. Some boomers who are nostalgic for the past want the car they had in their youth -- or the car they wanted in their youth. This segment is giving new life to Detroit muscle cars such as the Chevy Camaro, Dodge Challenger and Ford Mustang. And performance is being redefined to mean not just raw horsepower but fuel efficiency in a luxury or sport package. We're seeing highly efficient diesel-powered Audis, BMWs and Mercedes, and hybrid BMW X5s and Mercedes S-Classes.
"At the recent Geneva motor show, I also saw hybrid versions of a Porsche and a Ferrari -- perhaps the dream car of many baby boomers," notes Krebs.
Finally, indulgence comes in all segments and price categories. Just because boomers downsize doesn't mean they are willing to give up the pampering and rewards they have grown accustomed to. They want not only heated but cooled seats, navigation, phone -- hands-free and voice-activated -- their own music. And automakers are accommodating with features like Ford's Sync.
"Ultimately, we boomers haven't changed: we still want it all," Krebs concludes.