One of the hot topics in the automobile business for nearly a decade has been the discussion around when younger buyers will start buying new cars.
However, new research from Sivak Applied Research, which was founded by Michael Sivak, a former researcher with the University of Michigan Transportation Research Institute, reveals that more than half of all new vehicles in the U.S. are now purchased by people 55 years old and older.
The percentage of new vehicles sold to younger buyers older than 54 is now larger than it was only a decade ago. In 2007, a majority of buyers (53%) were age 35 to 54, while in 2017 a majority (52%) were age 55 and older. In short, baby boomers still buy the majority of new vehicles in the United States.
Sivak’s study found that middle-aged persons purchased proportionally fewer vehicles in 2017 than they did in 2007. The percentage of new vehicle buyers aged 35 to 44 dropped from 29% to 14% and from 24% to 20% for buyers 45 to 54.
On the other hand, the proportion of people aged 55 to 64 purchasing new vehicles increased from 18% to 25% from 2007 to 2017, and from 13% to 27% for those 65 and older, the study showed. Sivak’s study found that in 2007, a majority of buyers, 53%, were age 35 to 54, while in 2017 a majority, 52%, were age 55 and older.
However, that doesn’t mean that the conventional wisdom that millennials are finally buying new cars was or is a fallacy.
Millennials accounted for one out of three car sales in 2016, just before the data for Sivak’s study. However, they are quickly becoming the dominant share of buyers. By 2020, they’ll be the largest car buyer demographic, according to Cox Automotive.
The group predicts that they will account for 40% of all new vehicle sales, outpacing Baby Boomers just a bit, who will account for 36% of sales. While not an apples-to-apples comparison in terms of ages, the trend when broken up generationally, shows that younger buyers are still growing into their expected purchasing role.
Sivak’s study also does not examine the demographic spread of buyers opting for used or re-conditioned cars, which have become a popular alternative for new vehicles as the average price on a new vehicle climbs up towards $40,000, especially among younger buyers.
In addition, more vehicles are being purchased by fleets and other incorporated buyers than in previous years.
Sivak said his analysis compared the age composition of buyers of new light-duty vehicles – both cars and light trucks – in 2007 and 2017. The data for 2007 came from IHS Markit and applies to the buyers during the calendar year.
The data for 2017 was calculated from the information published by Wards Intelligence and they apply to the buyers of the model-year vehicles. Data from J.D. Power and Associates also was used in preparing the tables.
Overall, Sivak’s study implies the combination of higher prices and demographic shifts are have placed a cap on new vehicles sales in the United States, which some knowledgeable observers believed could top 20 million mark in this decade. While sales of new vehicles in the U.S. have been strong by historic measures, they are still well short of the 20-million mark projected earlier in the decade.
U.S. auto sales finished 2018 at nearly 17.3 million units, an increase over the previous year, which surprised many observers. This year, sales are expected to finish somewhere just below 17 million vehicles.
Michael Strong contributed to this report.