JD Power: Boomer and Gen-X Car Buyers Not So Different
5 November 1997
Boomers and Gen-Xers: Not So Different After All
A New J.D. Power and Associates Report Hones in on
New Vehicle Buyers by Generation
AGOURA HILLS, Calif., Nov. 5 -- In a new report released
today titled "Continue to Bet on the Baby Boomers," J.D. Power and Associates
releases its detailed analysis of four generations of new vehicle buyers.
This is the first report of its kind to look exclusively at the subset of the
population that is buying new vehicles. These select people are particularly
important as their median household incomes are an average of $25,000 higher
than the incomes of the population overall.
The report finds that the Baby Boomer generation, with 77 million people,
will continue to dominate the U.S. light vehicle market. For example, though
they represent just 38% of the driving age population, they buy 53% of the
light trucks sold in the U.S. and 39% of cars. Further, even among new
vehicle buyers they show the highest median income levels, and the oldest of
them won't begin to retire until about 2010. Lastly, they are among the most
loyal buyers.
While the Baby Boomers are the wealthiest, the report found that they are
not necessarily spending more on their vehicles. That is, at the segment
level each generation reports paying about the same amount. So, for example,
Baby Boomers, Generation-Xers, and those 51 and Older all report spending
roughly the same amount for their sport utility vehicles.
"This means that there is a common theme across all generations in terms
of what people are paying for specific types of vehicles. However, because of
their different income levels, we found that Generation-X buyers and those 51
and older are having to 'stretch' their incomes the most to afford these
vehicles," notes Lincoln Merrihew, director at J.D. Power and Associates. The
"stretch factor" is less of a concern for the oldest buyers as they have the
highest share that pay for their vehicles with cash. Likewise, they are the
buyers most likely to be free of debt associated with mortgages and children's
tuition.
One concern for the industry that this finding raises, is how Generation-X
buyers' purchase decisions will change once they begin to take on mortgages
and related expenses. Therefore, the key question is whether their incomes
will rise commensurate with the rise in expenses. (Certainly this was the
case for the Baby Boomers.) If not, their ability to stretch for new vehicle
purchases in the future may be hindered.
The fact that Generation-X buyers are spending as much as the other
generations on their vehicles is surprising. This generation is often labeled
an enigma, yet those buying new vehicles tend to be like many other new
vehicle buyers in that they like vehicles that are well-equipped and stylish.
In fact, this type of buyer is the most common among all Generation-X new
vehicle buyers. It is evidently the non-new-vehicle buying part of this
generation that is doing its best not to conform. "It appears that the
differences typically associated with this generation are overwhelmed by the
influences associated with being able to afford a new vehicle," notes Thad
Malesh, project manger at J.D. Power and Associates.
The report assesses generations of new vehicle buyers using a number of
measures including income, family size, gender, psychographics, loyalty, and
their propensity to move in to and out of some of the most popular segments.
For example, the report addresses the potential impact on the minivan market
as the buyer base shifts from Baby Boomers to Generation-X, as well as loyalty
to the SUV segment.
J.D. Power and Associates is an international firm best known for its
marketing information services in key business sectors including market
research, forecasting, and customer satisfaction. The firm's quality and
satisfaction measurements are based on actual customer-responses from over a
million consumers annually. With its headquarters in Agoura Hills,
California, the firm also has U.S. offices in Torrance, California; Michigan;
and Connecticut. Its international locations include Japan, Korea, England,
Canada and Brazil.
J.D. Power and Associates can be accessed through the World Wide Web at
http://www.jdpower.com . Email: info@jdpower.com.
No advertising or other promotional use can be made of the information in
this release or J.D. Power and Associates survey results without the express
prior written consent of J.D. Power and Associates.
SOURCE J.D. Power and Associates
