Baby Boomers Are the Key to Automotive Recovery
While automakers may be focusing a lot of their attention on the next generation of potential buyers, they shouldn't forget about the middle age motorists who remain key to the industry's recovery, warned a new study.
Millennials may someday be the dominant buying group, but for now, Baby Boomers remain at least 15 times more likely to buy a new car, truck or crossover, reported the University of Michigan Transportation Research Institute, or UMTRI.
"The probability of buying a vehicle per driver is highest for people between 55 and 64 years of age," said lead researcher Michael Sivak. "That is probably surprising to many people because they think of much younger people being the target audience."
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As for Gen-X, they're also taking a back seat to Boomers, according to UMTRI. They accounted for 29 percent of U.S. new vehicle purchases as recently as 2007, but by 2011 that had dipped to just 22 percent. On the other hand, buyers between the age of 55 to 64 saw their share of the new vehicle market surge from 18 percent to 23 percent during the same period.
The numbers might come as a surprise to those in the automotive marketing and advertising communities who have fixed their sights on Millennials, with a growing share of industry dollars targeting them through favored outlets such as Facebook and other social media.
As to why Generations-X and –Y aren't a more significant force, researchers point to a number of factors. For one thing, younger consumers were particularly hard hit by the deep U.S. recession, employment among Millennials still lagging the American workforce as a whole.
Meanwhile, another recent study by the University of Michigan found that the newest generation of consumers are far more likely than older Americans to delay getting a driver's license—or skipping that rite of passage entirely. Less than 70 percent of 19-year-olds surveyed last year had obtained a license, the lowest figure in nearly three decades.
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"The big question," according to researcher Sivak, is whether this trend is going to continue.
There are several trends that should give pause to automotive planners. Whether by choice or through financial reality, the number of American households without a car has doubled over the past two decades—and is now approaching 10 percent, according to a separate study by CNW Marketing released last month.
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Noting that this figure is up from just 5.7 percent as recently as 1991, CNW research director Art Spinella noted, "While the recession was in large part responsible for the latest spurt, the trend was already clear, a growing number of Americans felt they didn't need or want a personal car."
The numbers reflect a growing shift towards urban living among Millennials, many of whom find they can live without owning a car in the city—or fill the occasional need for a vehicle through a car-sharing service.
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But CNW found that Baby Boomers have also become a part of the car-less trend, especially among older members of the generation who have migrated to retirement communities where vehicles are not always a necessity of life.
Nonetheless, Boomers still are driving the auto industry and are likely to continue to do so for some time, according to most researchers. While only one in every 222 Americans between 18 and 24 purchased a new vehicle in 2011, the figure surges to one in 15 Boomers.
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And that, according to Sivak and other analysts, should have industry marketers thinking twice about their ad strategies. Then again, the old adage likely still holds true that it's easy to sell a young man's car to an older motorist than it is to sell an old man's car to a younger buyer.
-By CNBC Contributor Paul Eisenstein; Follow him on Twitter @DetroitBureau