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    Lending | 3 min read

    How Baby Boomers May Hold the Key to Auto Lending Sales

    By now, you've probably heard the sad auto industry news, that vehicle sales are down this year and are not expected to rebound anytime soon. Basically, auto manufacturers did too good a job in recent years, building cars that last longer than ever and still run properly. As a result, consumers are not forced to replace their vehicles as soon or as often as in years past.

    Of course, unfortunately for the auto lending industry, as auto sales stall, so do lending sales. To combat a loss in traditional lending opportunities and increase your lending amounts to approach the 2016 peak, when total outstanding auto loan amounts hit $1 trillion, consider shifting your primary target from young adults to baby boomers, who may prove to be your next great group of borrowers.

    Baby boomers are the generation born between 1946 and 1964. We have almost 75 million baby boomers in the United States today, and they're the perfect current target for auto lending sales due to their financial status and spending habits:

    • Many baby boomers were successful in their careers and investments, and many still choose to work for extra income, making them an affluent group overall.

    • Since a lot of baby boomers are no longer saving for retirement, they're enjoying spending the wealth they accumulated during their working lives.

    • Baby boomers hold more than 70% of the disposable income in the U.S.

    • According to AARP, Americans 50 and older spend $3.2 trillion every year.

    • Baby boomers are living longer and healthier lives than previous generations, giving them more time and energy to enjoy travel and leisure activities outside their homes.

    In addition, baby boomers have always valued the freedom of the open road and vehicle ownership. Most have no intention of slowing down their driving as they age. Instead, they are looking toward new vehicle features to assist them in continuing to drive themselves wherever they wish to go. Auto manufacturers have been happy to accommodate drivers who may be experiencing slowed response time, decreased agility, arthritis, and deteriorating eyesight by incorporating new technology:

    • Lane-departure warnings

    • Backup cameras to assist drivers who can't turn as easily

    • Easy-adjust seats

    • Large panel controls

    • Large monitors

    • High-contrast dash panels

    Buying a vehicle with assistive features like those listed above often means buyers must pass over standard cars in favor of a luxury vehicle or a greatly upgraded model of standard car. Either choice is likely to carry a much larger price tag than the vehicle those same buyers may have chosen years ago. Luckily, millions of baby boomers have the desire and funds to purchase these luxury vehicles and upgraded features. With the higher purchase prices that accompany the luxury cars and upgrades, concentrating on lending to baby boomers may help your financial institution recoup some of the decreases in auto lending numbers that we've seen this year.

    In addition to combating declining sales, lending to baby boomers, many of whom have substantial savings and financial stability, may be one way to turn around rising rates of delinquency. Overall, focusing on lending to baby boomers may be the best way to keep your sales and income on track.

    For more auto lending tips and information, download our free ebook, 2018 State of Auto Lending.

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    John DeLuccia

    As Account Vice President for SWBC’s Financial Institution Group, John DeLuccia services Florida and Virginia financial institutions within lending services, insurance, and loss mitigation programs. Before joining SWBC in 2007, John worked with the Federal Reserve Bank as a Member Relationship Manager for Southeast Corporate Federal Credit Union, serving clients across South Florida, U.S. Virgin Islands, and Puerto Rico.

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