By Isabella Shaya, Crain News Service
DETROIT (June 3, 2013) — Auto makers and car dealers have the best chance of selling new vehicles by marketing to consumers ages 55 to 64, according to a University of Michigan study released May 30.
The study looked at the likelihood of a licensed driver buying a new light vehicle based on the consumer's age.
Michael Sivak, a research professor at the university's Transportation Research Institute, compared U.S. data from 2007 and 2011.
Per licensed driver, people ages 55 to 64 in 2011 had the highest probability of buying a new vehicle compared with drivers between the ages of 35 and 44 in 2007.
Lacey Plache, chief economist for Edmunds.com, said older consumers buy more vehicles because many of them are baby boomers, a large generation whose members are about 49 to 67.
Ms. Plache said the 35- to 44-year-old age group suffered the largest net worth loss during the recession, which affected their car-buying abilities.
Drivers in 2011 ages 18 to 24 were the least likely to buy a new vehicle—one vehicle per 221.8 drivers.
But Ms. Plache said auto makers and car dealers should not rule out younger drivers, particularly the large generation of millennials—those consumers mainly in their 20s—when looking for new-vehicle buyers.
"It's not so much they don't want cars. They have just had a delayed entry into the market because of the recession," she said.
Those ages 18 to 34 had a 10 percent growth in share of sales from 2011 to 2012, compared with an 8 percent decrease for those ages 45 to 54 and 4 percent decrease for those ages 55 to 64.
In 2011 overall, one vehicle was bought for every 19.7 drivers, according to the research.
"The present findings suggest that marketing efforts that focus on drivers 55 to 64 years old should have the highest probability of success per driver," Mr. Sivak said in a statement.
Ms. Plache said auto makers are not wasting money by advertising to young drivers—who are up-and-coming buyers getting to know brands.
Marketing aimed at an older audience might put off younger buyers, whereas advertisements for a younger audience might appeal to the younger and older buyer looking to feel young.
"Older people, they want to be young, so if something is hip and appealing to younger people…older people could end up buying it," Ms. Plache said.
Mr. Sivak wrote in an email that the findings of the study might interest vehicle suppliers, manufacturers and dealers.
Ms. Plache said auto makers and dealers should see the study as an opportunity to hit an expanding generation and an older generation that is buying more vehicles.
"You can't just look at 2011 and say this is the end of the story because things are still changing," she said.
According to the research, the shift in age of new-vehicle sales can be attributed to the economic downturn that reduced vehicle sales and fewer young people having driver's licenses compared with additional older people with licenses.
From 2007 to 2011, there was a 6.6 percent decline in the number of people between ages 35 and 44 with driver's licenses, and a 16 percent jump in licenses for those ages 65 to 74.
This report appeared in Automotive News, a Detroit-based sister publication of Tire Business.U-M PRESS RELEASE: Older drivers more likely to buy new vehicles
ANN ARBOR—Adults under 50 have long been the ideal target group for advertisers, but when it comes to buying new vehicles, older consumers may be a marketer's best bet, says a University of Michigan researcher.
Michael Sivak, research professor at the U-M Transportation Research Institute, examined the differences in the probability of licensed drivers purchasing a new light-duty vehicle (car, pickup truck, SUV or minivan) as a function of their age for the years 2007 and 2011.
He found that in 2011, the peak probability of buying a new vehicle per driver was among those between 55 and 64 years of age—a shift from four years earlier that peaked with the 35-to-44-year-old age group.
In 2011, one vehicle was purchased for every 14.6 drivers aged 55-64. By comparison, the rates for other groups of drivers were: 14.9 for ages 65-74; 15.0 for ages 45-54; 15.9 for ages 35-44; 19.7 for all age groups combined; 26.6 for age 75 and older; 34.9 for ages 25-34; and 221.8 for ages 18-24.
"There were substantial increases from 2007 to 2011 in the number of drivers 55 to 64 years of age and 65 to 74 years of age," Sivak said. "This trend likely reflects the aging of the general population, coupled with the increased probability of older persons having a driver's license."
The largest number of vehicles are currently purchased by those aged 45-54 (26 percent of new buyers in 2011), followed by those aged 55-64 (23 percent).
In comparison to 2007, in 2011 there were proportionally fewer vehicle buyers for both the 35-to-44-year-old age group and the 25-to-34-year-old age group, while there were more buyers for all age groups 45 and older—including a 5-percentage-point rise for those aged 55 to 64.
"The findings suggest that marketing efforts that focus on drivers 55 to 64 years old should have the highest probability of success per driver," Sivak said. "The emphasis on this relatively older age group is further supported by the expected continuation of the graying of the population and the consequent continuation of the increase in the number of older licensed drivers."