shifting gears

American Demographics, Jan, 2000 by Michelle Krebs

graying boomers with money to burn and a reluctance to admit they're aging will pose challenges to automakers preparing for the coming wave of seniors behind the wheel.

Kathy Ryan, a 52-year-old ski instructor and golf merchandiser from Vail, Colorado, is buying a car. She is shopping convertibles from European makers, including BMW, Audi, and Saab. She's leaning toward the Audi TT convertible when it comes out next spring.

"My requirements were enough trunk space for two sets of golf clubs and roller blades, the ability to have a bike rack, and good performance," she says. Just in case, she'll keep either her 1991 Subaru or her 1994 Volkswagen, each with more than 100,000 miles on them, for utility. "But it'll be the Audi that punches my ticket," she says.

Auto companies, their suppliers, and industry prognosticators are paying close attention to vehicle purchases by over-50 buyers like Ryan, who belongs to one of the country's largest and fastest-growing car-buying segments. Right now, 76 million people in the United States are 50 or older, according to the U.S. Census Bureau. In five years, 85 million will be over 50.

"Aging baby boomers are the biggest and most significant buying group in the population. Through their retirement years, they will grow stronger as a buying entity and will remain so until their time is gone," says Nate Young, group vice president of market planning, new product development and industrial design for Plymouth, Michigan-based Johnson Controls Inc., one of the world's largest suppliers of automotive interior components, including seats.

The size of the population segment, its affluence, and longer life expectancy - which suggests baby boomers will drive longer than did their parents - has captured the attention of the auto industry, which is trying to get inside the heads of people like Ryan to figure out if and how their car-buying patterns will change as they grow older.

At the moment, over-50 car buyers generally purchase more expensive vehicles than the rest of the population, ranging from pricier mid-size cars to top-of-the-line luxury automobiles and premium sport utility vehicles, according to an exclusive analysis for American Demographics of the 1999 APEAL study done by J.D. Power & Associates, a market research firm in Agoura Hills, California. The APEAL study is based on responses from nearly 88,000 new-vehicle owners, and examines what people like about their new cars and trucks and what kinds of features they require in their vehicles.

The study shows that the over-50 crowd is slightly more likely to purchase domestic brands than imported ones, favoring domestic nameplates in 12 out of 19 vehicle segments, versus 11 of 19 for the under-50 group.

The major difference between the over-50 and under-50 buyers is psychographic - why they buy what they buy. The older buyers lean toward more sensible vehicles, while the largest group of younger buyers consider themselves "practical enthusiasts," they want utility, but with a little more fun and emotion. As expected, the plus-50 buyers rate quality, reliability, and durability higher than do under-50 buyers, who rank emotional appeal higher. "The younger buyers want more sex appeal and flash. That's what excites them," says Jacques daCosta, J.D. Power's senior manager of product research.

In addition, older buyers' lists of must-have features relate largely to comfort and convenience. They want leather seats, lumbar support, and sturdy cup holders; younger buyers, meanwhile, list premium audio systems with CD changers and sunroofs as higher priorities. Both groups rank safety and security features - such as antitheft alarms and side airbags - high on their wish lists.

In general, however, the J.D. Power data suggest that far fewer differences in buying patterns exist between the over-50 and under-50 buyers than one might expect. That is partly due to the fact that the greatest number of buyers in the under-50 group surveyed fall between the ages of 45 and 49, and the largest group in the over-50 group are between 50 and 54. In addition, other demographics are fairly similar: incomes and educational levels are only slightly higher for the younger group. The number of children at home stands out as a major demographic divide: Of those surveyed, fully 85 percent of the over-50 crowd are empty nesters.

Auto manufacturers and suppliers, who take up to four years to develop new cars and trucks, are forming special teams to conduct surveys and consumer clinics to find out what older buyers want in their vehicles. All are finding many of the things older buyers need and want are rather simple: They want large knobs and switches to control the radio and temperature. They're keen on high-contrast numbers and letters that are easy to read. They like large door openings and high-positioned seats to make it easier to get in and out of the vehicle. Interior door handles must be large and easy to grip.

At General Motors Corp., the Paragon Team is studying the needs of aging car buyers - many of whom face physical challenges - and is testing new vehicles to make sure they meet those needs. Team leader Paul Ulrich notes that one in five Americans has a physical disability, and arthritis due to aging is the biggest culprit. "As automakers, we need to accommodate the aging process," says Ulrich, who himself was stricken with polio and uses a wheelchair. "If driving is painful or uncomfortable, people will limit their trips, and we don't want that."