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by Julie Halpert, AARP Bulletin, March 29, 2010|Comments: 0
Last September, as part of the Cash for Clunkers program, Joan Schweighardt, 61, and her husband, Michael Dooley, 59, traded in their 1996 Ford Explorer for a tiny Smart car. In swapping a gas-guzzling SUV for a golf cart-size vehicle that gets 41 miles a gallon, they reduced not only the cost of a major purchase, but also their impact on the environment. They “absolutely love” their new wheels, says Schweighardt, a writer who lives in Albuquerque, N.M. She was surprised at how roomy the car is—enough to keep her 6-foot-3-inch husband comfortable, and haul luggage.
Green cars are gaining ground, due to fears of fluctuating gas prices, tightening fuel economy requirements, and consumer consciousness. They burn less fuel, save money at the pump, pollute less and ultimately reduce reliance on foreign oil. “U.S. cars and light trucks emit more global warming pollution than all but five entire nations,” says Daniel Becker, director of the Safe Climate Campaign. ”Cutting this pollution represents the biggest single step to curbing global warming.”
Automakers have embraced green as their new mantra, but they’re also banking on this new segment as a lifeline for the industry itself. Crucial to that strategy will be attracting older buyers, and early figures show that they’re responsive. Industry analyst Lonnie Miller, of R.L. Polk & Co., says that 42 percent of all 2009 U.S. hybrid purchasers were ages 55 to 74; in contrast, buyers 18 to 44—a sought-after demographic for advertisers—represented only 27 percent of these sales. “From a buying power potential,” Miller says, older Americans like Schweighardt and Dooley “are a prime audience.”
But it’s hard to predict whether that trend will continue and encompass the full range of green vehicles coming down the pike: high-mileage, gasoline-powered cars like the Smart; hybrids, which run on a combination of a fuel engine and an electric battery; and pure electric vehicles that run on a battery alone. It’s one thing to buy a hybrid, which can be refueled at a gas station and doesn’t require a change in behavior; it’s quite another to purchase an electric vehicle that needs to be recharged like a laptop.
A hybrid SUV, after all, is still an SUV, with all that room. How will older Americans react to a type of vehicle that could cramp their style or make it harder to cart around grandchildren and antiques? It remains to be seen whether they will embrace not only the new technology but also the new driving habits that some of those technologies demand. Will boomers lead the charge, or will they become a niche customer?
Right place, right time
They’re certainly in an ideal position to go green. Older Americans tend to have the financial means necessary to pay the higher prices associated with green vehicles. Hybrids cost roughly $3,000 to $4,000 more than comparable gasoline vehicles, while Chevrolet’s electric Volt, which goes on sale later this year, is expected to list for around $40,000—steep for a compact car. The Toyota Prius hybrid costs around $25,000.
While automakers refuse to confirm that they’re deliberately targeting older buyers, the sales figures thus far for hybrid vehicles show that’s who’s buying them. Such buyers “will continue to be an important part of the customer group for green cars in the future,” says Honda spokesman Chuck Schifsky.
As boomers continue to become empty-nesters and retire, many of them will gravitate to smaller cars, says George Pipas, Ford Motor Company’s chief U.S. sales analyst. That’s already happening with two cars initially marketed to younger Americans—the boxy Honda Element, a small SUV, and Toyota’s Scion xB—a combination of compact, hatchback and SUV. Ford’s sporty Fiesta and Focus cue off the design strategy of sophisticated subcompacts that have fared well in Europe.
Though hardly luxurious, they’re a huge step up from their econo-box predecessors in terms of amenities, style, performance and fit-and-finish. Ford hopes that including features from higher-end vehicles will entice older drivers into these smaller, highly efficient, gasoline-powered cars. Gone are the days, says Pipas, when retirees will be driving around in “old Lincoln Town Cars and Grand Marquis and Buick Park Avenues.”
While hybrids and miniaturized fuel sippers are bridge technologies—a first step to ratcheting down emissions—they still burn gas. Electric vehicles, or EVs, represent the first revolutionary step toward reducing dependence on foreign oil, because they emit no pollutants from the tailpipe (pollution produced by the electricity is a separate, important issue).
But they’ll require a substantial shift in behavior from drivers, and because so few EVs are on the road, it’s unclear how older Americans will respond. Most run at low speeds and can’t go terribly far on a charge, limiting their marketability. That said, a study by CNW Marketing Research in Bandon, Ore., found that buyers age 56 and over accounted for 40 percent of electric car purchases last year. “Older Americans have been responsible for the growth in hybrid and electric vehicles,” says Art Spinella, the firm’s president.
Nissan is nudging people over the electric hurdle with its Leaf, due in December, which can go 100 miles before recharging. Nissan North America conducted its own nationwide survey and found that of people over 55, more than 40 percent would consider owning a battery electric vehicle, while more than 70 percent disagreed with the statement that they would never buy a vehicle that did not run on gasoline (compared with 66 percent of 25- to 29-year-olds).
“This indicates openness to new solutions and to learning more about what these products would offer and how it would fit into their lifestyles,” said Nissan market researcher Joetta Gobell. The survey also indicates that more than 80 percent of that age group have a garage or carport, meaning they can safely and simply recharge right at home.
One likely electric vehicle customer is Tom Dowling, a 72-year-old retiree living in Folsom, Calif. He’s eyeing either the Leaf or the Chevy Volt. A longtime electric vehicle enthusiast, he previously owned General Motors’ initial electric vehicle, the EV1, as well as a Chevy S10 electric pickup and a Ford Ranger EV, and currently owns two Toyota RAV4 EVs. He says EVs are great for the frequent trips he and his wife make within a 25- to 30-mile radius of their home. “We love never having to buy gasoline and the quiet and smooth driving,” he says.
EVs can also even out expenses for those living on a fixed income, because they reduce exposure to fluctuating fuel prices. In fact, driving an EV costs about one-third as much as driving a car on gas at $2.80 a gallon, according to Luke Tonachel of the Natural Resources Defense Council.
Electric vehicles cut out the cost of maintenance such as oil changes, adds John O’Dell, editor of Edmunds GreenCarAdvisor.com. “It could be part of a well-planned retirement to have one,” he says.
He also thinks boomers’ romantic notions of the automobile could work in manufacturers’ favor. “There’s a bigger cohort of the new senior citizen who still thinks of the car as something exciting and fun and an extension of their personality,” he says, so if they “lean green, they’ll be more willing to buy green.”
Hurdles to going green
Of course, the challenge will be to sway the vast majority of older Americans who have never driven a green vehicle. And although boomers are conscious of the environment perhaps more than previous generations of older adults, they don’t necessarily want to make trade-offs, at least according Donna Boland, a spokesperson for Mercedes-Benz USA. In particular, she says, customers don’t want to pay substantially more for a hybrid vehicle. With that in mind, the company tried to keep costs down when designing its S400 hybrid, for example using a V6 instead of a V8 engine. The luxury sedan still costs $87,950, which is in line with its conventional competitors.
A lot of people in this age group are flocking to crossovers, according to John Wolkonowicz of IHS Global Insight. They have conventional engines but are lighter than SUVs, providing the ride and handling of a car with slightly improved fuel economy.
While some see boomers as receptive to new technology and interested in protecting the environment, Stephanie A. Brinley, an analyst at AutoPacific, says those characteristics are far more prevalent among younger buyers. Though older buyers may have the income to pay a hybrid premium, she says, they may find it doesn’t make financial sense to do so, because they don’t drive as much and consume less fuel.
And what about the notion that bigger is safer? According to the Insurance Institute for Highway Safety, when a large and small vehicle collide, you’re better off in the big one. Because of that, IIHS spokesman Russ Rader says, if you want the safest, most fuel-efficient car, a hybrid makes the most sense because you get a bigger vehicle with a smaller vehicle’s efficiency.
The midsize Ford Fusion hybrid, he says, earned the highest crash test ratings among midsize cars from both the IIHS and the National Highway Traffic Safety Administration, and it gets 39 miles per gallon combined city/highway fuel economy—far better than many conventional cars. But tiny can be tough, too: the Honda Fit has a maximum five-star crash-test rating for small cars, and the Toyota Yaris has four stars. “Small cars have more available safety gear than ever before,” says Jonathan Linkov, Consumer Reports’ managing editor for autos.
So it makes sense that some older buyers will wait and see, at least with EVs. Automakers also have to overcome “range anxiety,” fears about the ability to make it from point A to point B. That, in fact, was part of the reason Schweighardt chose her Smart over an EV. At the time, none could exceed 40 miles per hour, and she didn’t want to have to forgo highway driving.
For now, she’s happy with her choice. Over Christmas last year, she and her husband took the Smart on a 2,000-mile round-trip journey from their home in Albuquerque to South Padre Island in Texas. She likes all the windows, the smoked-glass moon roof, and how you sit up nice and tall—just like in an SUV.
Julie Halpert, who has covered the car industry for two decades, lives in Michigan.
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