• by Mark Bradbury , Columnist, June 6, 2013

I am a proud Boomer. As a generation, we got a lot of things right. Yet, after spending an afternoon reading MediaPost’s Engage: Gen Y blog, I am envious of how Millennials, a generation composed primarily of 18-34 year-olds, view the role of consumerism. 

Millennials don’t believe that joy in life comes from making and spending money. They value having balanced lives over more traditional markers of success. When making purchase decisions, Millennials prioritize need, functionality and economic considerations over brand name. As a result, they are likely to delay or forego altogether big-ticket purchases. I am reminded of a favorite quote from Margaret Mead, which just as likely could have come from the mouth of a Millennial.

"It is utterly false and cruelly arbitrary to put all the play and learning into childhood, all the work into middle age and all the regrets into old age.”

My personal envy of their general philosophy aside, Millennials’ tendency to devalue consumerism is bad news for marketers, perhaps none more so than those in the auto industry. Millennials simply are not the consumers their Boomer parents were at the same age, and it has turned the auto industry on its head.

Just a decade ago, 58% of new vehicles were bought by drivers under age 50, according to the most recent J.D. Power data release. That number is now 37%, due to a 4.3 million drop in sales among the under 50 group. Drivers 50 and older buy 63% of all new vehicles, which isn't news to auto makers. In fact, for the third year in a row, the 50+ demographic has purchased more than 6 out of 10 new vehicles. 

Of grave concern to industry insiders is a 57% drop in sales among drivers under 35, a segment that now accounts for just 13% of all new vehicle sales. In a clear sign of the industry’s transformation, drivers age 65 and older now buy twice as many new cars as those under 35. 

Conventional wisdom says that the time to develop brand loyalty among drivers is when they first enter the market, but Millennials are entering the new vehicle market in decreasing numbers. 

What's causing young buyers to flee the market? A wide variety of factors.

For starters, Millennials can’t afford new cars. They have a significant amount of debt, much of it from school loans, and they can’t get jobs (or jobs that pay enough) to pay it back. Their social lives depend more on technology—texting, social networks, and virtual face-to-face chatting—than on transportation to stay connected. Millennials also don’t see cars as being environmentally friendly, a factor they highly value. If they need transportation, there are several alternatives, such as Zipcar, public transportation, bikes, walking, or driving their parents’ cars. (One in four 18-30 year olds has moved back in with parents.) Spending time and money on high-ticket products they don't believe they need just isn't part of their DNA. 

Few, if any, industries have gone through as much upheaval as the auto industry. While auto makers aren't alone in their reluctance to accept the realities of Millennial consumers, their steadfast pursuit of younger buyers is striking given strong evidence of its ineffectiveness as a marketing strategy for maximizing sales.

Even more remarkable is their relative disinterest in the segment that drives more sales than any other. I’m not saying auto marketers shouldn’t target younger buyers at all, but the real opportunity lies in the 50+ demo, a cohort that buys nearly five times as many new cars as drivers under 35 (6.2 million vs. 1.3 million).

The primary argument against targeting 50+ is that their brand loyalty is already established. The fallacy in that argument has been laid bare by dramatic shifts in Boomer purchase behavior in the past 10 years.

• Domestics now represent 41% of all new vehicles purchased by Boomers, down from 57%
• Asian imports now account for 49% of Boomer sales, up from 34% 
• Market share dropped for leading domestic brands, including Ford (from 16.7% to 13.0%) and Chevrolet (from 16.0% to 11.9%), while more than doubling for imports such as Nissan and (from 4.1% to 8.8%) and Kia (from 1.6% to 5.0%)

Like every other generation, Boomers exhibited a willingness to switch to import vehicles when American brands ceased to be competitive in both quality and price. That’s a hallmark of Boomer consumerism—our loyalty is up for grabs—that marketers have yet to come to grips with.

With American brands offering better vehicles and pricing in recent years, are older consumers back? To a degree, yes, but not as much as they could be if more auto marketers took direct aim at 50+ instead of focusing most of their efforts on the largely non-buying younger demo. 

In the past two years, American brands have experienced a 3.5 percentage point growth among consumers 50+, just a fraction of the 5.3 percentage point growth they have experienced among drivers under 35. That 1.8 percentage point difference may not seem significant, but it amounts to roughly $3.5 billion in sales revenue.

In today’s ultra-competitive consumer landscape, no industry, auto or otherwise, can afford to leave sales on the table. Yet, as long as marketers continue to covet Millennials at the expense of targeting Boomer and older consumers, that’s likely to happen. 

For a variety of reasons, financial and otherwise, Boomers and older consumers spend a lot more than Millennials. They are the backbone of the American economy. It’s time that marketing plans reflect that reality.