One reason car sales have risen so far might be that more Americans drive that in the past. A recent study says that is not true, that driving by Americans peaked in 2004. So who buys all of those new cars? Perhaps people who are replacing old cars, or those who want to take advantage of ridiculously good auto loan deals.
U.S. PIRG Education Fund and Frontier Group issued a report that looked at several sets of fact to draw its conclusions about driving patterns:
- Americans drove more miles nearly every year between the end of World War II and 2004. By the end of this period of rapid increases in per-capita driving -- which we call the “Driving Boom” -- the average American was driving 85 percent more miles each year than in 1970.
- Americans drive no more miles in total today than we did in 2004 and no more per person than we did in 1996.
- On the other hand, Americans took nearly 10 percent more trips via public transportation in 2011 than we did in 2005. The nation also saw increases in commuting by bike and on foot.
Millennials are blamed or credited with nearly every trend change in America recently, and driving is no different:
The unique combination of conditions that fueled the Driving Boom -- from cheap gas prices to the rapid expansion of the workforce during the Baby Boom generation -- no longer exists. Meanwhile, a new generation -- the Millennials -- is demanding a new American Dream less dependent on driving.
This new assessment is not unique. The Transportation Research Institute at The University of Michigan (UMTRI ) made a related observation in research released recently. In a study, UMTRI research professor Michael Sivak found:
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.
Car research group R.L. Polk issued numbers that may be worse for the car industry, at least as it moves into the next decade. Many people would expect luxury car buyers to be older, and that is the case. The media age of Cadillac buyers was 57 in 2011, and for Lincoln buyers the figure was 60 years old. Even luxury cars that appeared aimed at younger buyers have relatively old median ages among those who purchase them. For example, the median age of BMW buyers was 50 in 2011, according to Polk. Among less expensive cars, the patterns were not much different. The media age of Ford Motor Co. (NYSE:F) buyers was 52, and among Toyota Motor Corp. (TM) buyers it was 51. Across virtually all models, Polk researchers found median age rose from in 2007.
Car manufacturers ought to shudder, based on the data. The current car sales boom has taken the auto sales rate in the United States above 15 million this year, by most estimates, and some put that number at 15.5 million. Although the figure is not quite back to prerecession levels, at the current rate of growth, it could be next year. However, the demographics of car buyer age would argue that sales will taper off as Americans over 55 move toward the end of their driving lives. Even if that will not happen for several years, the car manufacturing business is likely in for a shock.
Old people are the car buyers of today, and they probably will be more and more in the future. Therefore, models aimed at younger drivers appear to be nothing more than a waste of auto manufacturer time and money.