The future of car buying: Don't supersize meANN ARBOR, Mich. -- Big cars and trucks are out. Smaller ones that offer more for your dollar are in. And many drivers will hang onto the new cars they buy longer.
We've seen some of this before -- in the 1970s. But there's reason to believe that this time, American car-buying habits have changed forever.
Scarred by the worst financial crisis since the 1930s and still leery of high gas prices, people are walking into showrooms intent on spending less. The trend is strongest among baby boomers, who are 44 to 63 years old and make up a quarter of the population, dealers and industry analysts say.
A generation ago, boomers drove the economy out of the second-worst recession since World War II. After the downturn ended in 1982, they went on a buying spree throughout the '80s; for many, free-spending became a way of life that didn't end until last year. But their investments and home values have taken a hit. And with time running out until retirement, economizing on the second-biggest purchase most people make has become common.
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"Up until now it's 'I want bigger and more than I had last year,"' says Jerry Seiner, who owns several GM franchises in the Salt Lake City area. "This has been the biggest awakening of the United States population since the Great Depression."
Ford's top sales analyst, George Pipas, describes the shift as one from "conspicuous consumption" to "careful consumption."
To a degree, the shift has been forced on consumers. The Great Recession ended the days of easy credit, which propelled car and truck sales most of this decade. During the boom years, almost anyone qualified to buy a new vehicle. Zero percent financing on purchases and cut-rate deals on leases kept monthly payments low and encouraged people to trade every three or four years. Sales ballooned to record numbers of about 17 million vehicles a year in the first half of the decade.
Today, loans are harder to get and come with higher payments. About 60 percent of buyers finance a new car, and many no longer qualify for luxury models -- or want big monthly payments.
So many drivers will keep running up their odometers and scale back when they do buy, continuing to push down sales of large cars, sport utility vehicles and luxury brands. A poll taken in April by research firm AutoPacific found that 59 percent of recent buyers will keep their cars four years or more, up from 46 percent in 2008. It's easy to keep a vehicle longer because of improved quality.