NEW YORK (Bloomberg) -- Richard Emmons, 83, likes to spend his weekends cruising around in a 1995 Jaguar convertible with a big 12-cylinder engine. His weekday drive is either a 2009 Volkswagen Eos or the $82,000 Audi A8 sedan he bought in November.
After all, this octogenarian needs something reliable for his 10-mile commute to the Pratt & Whitney plant in Windsor, Conn., where he works full-time as a jet engineer. “I’m bad at retiring,” Emmons says. “I don’t really have a lot of hobbies anymore. I just like cars and investing.”
American seniors have never been healthier or wealthier. At the same time, cars have never been crammed with more features to safeguard drivers with fuzzier vision, slower reactions, and stiffer necks. Those forces have created a powerful economic engine for car manufacturers. This might just be the first time ever that one of the most promising demographics for the auto industry is represented by Social Security recipients.
“Honestly,” says Harley-Davidson Chief Marketing Officer Mark Hans-Richer, “we sell new bikes to guys in their 80s all the time.”
The roads in America are going gray. From 2003 to 2013, the number of licensed drivers over the age of 65 surged by 8.2 million, a 29 percent increase, according to U.S. Census data. The very old were particularly stubborn about pulling over for good. There are now about 3.5 million U.S. drivers over 84, a staggering 43 percent increase over a decade ago.
On the other end of the age spectrum, teenagers no longer have the income or inclination to own a car. Over that same 10- year period, the ranks of drivers under age 20 declined by 3 percent.
Don’t drive too slowly
Not only are seniors staying on the road longer, they also aren’t coasting into the sunset in clunkers. In the past five years, the number of new cars registered to households with a head age 65 or older has risen 65 percent, according to IHS. Drivers over the age of 75, meanwhile, registered about six times as many new cars as those age 18 to 24. The children may well be the future, but the fogies have the cash. What’s more, they want to use it before it’s too late.
Ben Winter, Fiat Chrysler Automobiles’ vice president for product planning, calls these customers “the matures.”
They tend to like minivans for schlepping the grandchildren and large sedans such as the company’s Chrysler 300 and Dodge Charger. “We don’t ignore any group ever. But some of the metrics are fairly compelling,” Winter says. “I’d say we’re talking about this group much more than we used to.”
They’re also increasingly spendthrift. CarGurus, an online shopping platform based in Boston, said the No. 1 vehicle searched by senior citizens on its site in recent years is the Chevrolet Corvette. “These folks seem to have really gourmet tastes in cars these days,” says CarGurus editor Steve Halloran. “They just aren’t looking at bargain-basement stuff.”
Healthy, wealthy, and safe
A surge in senior car shopping shouldn’t be a surprise. Americans are living longer than ever and staying healthier. Life expectancy in the U.S. has stretched by 3.3 years in the past two decades.
New safety features are letting seniors stay at the wheel longer and compelling them to trade up to newer models. Active braking has started to come standard on many vehicles, alongside blind-spot warnings and sensors that keep cars from drifting out of a lane. By May 2018, backup cameras will be a requirement on all new cars in the U.S.
The economic vitals of senior drivers are pretty healthy as well, thanks to bullish streaks in real estate and the stock market. Many of those who qualify for Social Security are putting off retirement indefinitely.
With two Harley-Davidson dealerships in Florida, Rodin Younessi has long familiarity with retirees who want to ride a hog. Lately, however, an even greater share of his sales has gone to seniors, because they tend to have better credit ratings. “If you can’t finance, most people can’t buy it,” Younessi says.
From 1989 to 2013, spending by consumers age 65 to 74 surged 18 percent while outlays by those over age 75 increased 15 percent, according to a recent analysis by the New York Times. Every demographic group under age 55, on the other hand, is spending less once inflation is considered. Millennials had their earning potential clipped by the 2008 recession and are still burdened with massive student loan debt. Of all new cars registered last year, only 12 percent went to households led by someone under the age of 35.
“Everything for this generation has just shifted,” says Steven Szakaly, an economist with the National Association of Auto Dealers. “Basically, they’re doing everything later in life, including getting married and buying a car.”
Aside from safety features, however, car companies aren’t well tuned to handle this shift toward seniors. The socioeconomic momentum runs against a central strategy in the auto industry: Get them young. As with any consumer business, the brands that hook shoppers in their teens and 20s have a better chance of building loyalty and hanging on to them as they get older and wealthier. The well-worn business school axiom still applies: It’s easier and cheaper to keep a customer than it is to win a new one.
Few efforts to woo grandma
Despite the rise in senior drivers, a number of carmakers contacted for this piece had little to say about grand plans to specifically target the group. “I honestly don’t see any brands catering to the older generations,” says Larry Dominique, executive vice president of TrueCar, a website that links buyers with local dealers. “Most brands are still just fighting heavily for the younger demographic.”