Boomers Drive a Boom in Small SUV Sales

By Bill McLauchlan

Is the idea of a compact SUV beginning to make more sense to you? If so, relax you’re not alone. In fact, especially if you favour a Ford, you’re on the leading edge of a demographic shift driving skyrocketing Escape sales.
  
The baby boomer preference for everything bigger over the last 35 years is shrinking, but this generation’s desire for comfort and amenities is still very much at the forefront in the choices they make as consumers.

“Those baby boomers who worked hard for and embraced the affluent lifestyle of the 1970s through the middle of the last decade – owning large homes and spacious vehicles – have reached a turning point,” says Sheryl Connelly, global consumer trends and futurist manager for Ford Motor Co. “This generation is now trending toward a simpler way of living, one that doesn’t eliminate the lavish comforts they’ve come to enjoy.

“The boomer population has always set the trends,” Connelly adds, “and now they’ve set a course for a more streamlined life that doesn’t sacrifice style and comfort.”

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Industry data supplied by Ford and Del Webb, part of the multi-brand homebuilder PulteGroup, show that boomers who comprised the growing market for large homes and made minivans and big SUVs popular are now shifting to still lavish, but smaller homes, condos and utility vehicles.

As the oldest of this generation – those born between 1946 and 1964 – marked their 60th birthdays in 2006, the population was estimated at about 78.2 million. Industry data suggest the baby boomer instinct for knowing what is chic continues to influence popular lifestyle choices.

The trend in homes increasing in size was a constant from the 1950s on, with average home sizes going from 860 square feet in 1960 to 2,505 square feet in 2012.

While baby boomers helped fuel that trend, evidence shows they are now breaking away, seeking cozier homes with top-of-the-line amenities and features.

Data from Ford show boomers are making the same decision with regard to what they put in their garage, moving away from the big SUV and minivan segments they dominated in the 1980s and 1990s to smaller, car-based utility vehicles that come with premium packages and styling.

The 2014 Ford Escape compact utility vehicle, for example, features 98 cubic feet of passenger volume – about a 21 percent difference from the larger 2014 Explorer’s almost 152 cubic feet. Between the Escape and the Expedition, there is an estimated 31 percent difference in passenger volume.

Baby boomers and small utility vehicles
The kind of premium content baby boomers are specifying as they downsize can also be found in the type of vehicle they now want to drive – smaller utility vehicles loaded with amenities and features.

An uptick in small utility vehicle sales started in 2004 and has continued a steady climb, according to retail sales data from Polk. Correlating with the number of adults considered to be baby boomers is the number of smaller, car-based utility vehicles being sold to that demographic.

“Trendy baby boomers want to downsize their homes and their vehicles, but they’re not willing to give up premium content in either case,” says Amy Marentic, marketing manager for Ford’s global car and crossover group. “Personally, I felt the need to downsize. My children are in college and I have no need for the larger utility any more, but I still want to feel like I’m driving something special.”

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Boomers are downsizing their lifestyles, driving a switch to smaller homes and smaller SUVS with premium packaging and style.

The largest demographic buying small utility vehicles such as the Escape are people between the ages of 55 and 64, according to Polk. In this key segment, retail registrations of the Escape are up 81 percent since 2009 – higher than overall industry growth. Small SUVs are most popular in this age group; more than 46 percent of Escape buyers opting for Titanium trim level are 56 or older, indicating a desire for high-series models loaded with technology and amenities.

The second-largest demographic are those between 45 and 54. The number of 65- to 74-year-olds purchasing small utility vehicles has more than doubled since 2009 – growing at more than twice the rate of new retail vehicle sales overall in the demographic, according to the same data.

“While the Escape is a compact utility built for everyone and we’re seeing strong sales across the board, sales are really being driven by these active adults in the 55- to 64-year-old range,” says Erich Merkle, U.S. sales analyst for Ford. “It’s no secret baby boomers are playing a large role in the compact utility vehicle segment, and will continue to do so well into the foreseeable future.”

The Escape is outpacing the industry in key population segments, including every age demographic above 55 years old.

In year-over-year retail sales, Escape is experiencing 24 percent growth – outpacing the national compact utility vehicle average increase of 18 percent.