October’s issue includes our annual 20 Questions feature. You can find these and 17 other questions–and answers–there.
Automakers use the desires of the average car buyer to justify many decisions, from the brief but glorious trend for plaid upholstery to the fact that almost every passenger vehicle sold in the U.S. will soon be some kind of SUV or truck. But who is this customer? There aren’t many industry-wide studies tracking car buyers by race or income, but we know how much people are paying for cars, which ones they’re buying, whether they’re men or women, and how old they are.
According to J.D. Power, buyers of premium large cars are, on average, the oldest while compact-car buyers are the youngest. Compact and small SUVs are the only segments where the majority of purchasers are women, while a huge percentage of full-size-pickup buyers are men. Unsurprisingly, buyers of luxury vehicles tend to finance their purchases over shorter terms and at lower rates compared with mass-market-vehicle buyers. The chart below tells more of the story.
What About the Average Lease Customer?
Leases typically make up about a third of new-car transactions. They’re good for customers who like having new cars every two or three years without the hassle of negotiating trade-in value or selling a car. Dealerships like them because they create a set of customers who are contractually obligated to return at a scheduled time, many of whom will hop right back into a lease from the same manufacturer.
Because the system relies on the automaker being able to sell off-lease vehicles on the (lightly) used market, which in turn requires the cars be returned on time and in excellent condition, carmakers are picky about whom they lease to. If you have a FICO score below 620 or can’t prove that you’re gainfully employed, you may not qualify. Because of these strict credit requirements, lease customers tend to be older and more affluent than vehicle buyers. As for the gender divide, J.D. Power says women make up about 44 percent of lessees and 39 percent of buyers. Race is usually not included in demographic studies on car ownership, but white people have higher credit scores on average than Black or Hispanic people, so they may make up a disproportionate share of lessees.
What About the Average Car?
We’ll start with the average age of cars on the road, which in 2020 is 11.9 years old, according to analytics firm IHS Markit. That’s a month older than the average in 2019, and IHS expects that number to continue rising as the pandemic drags on. Kelley Blue Book reports people who bought a new vehicle in June paid an average of $38,530 for it, a 3.1 percent increase compared with purchase prices from June 2019. Light trucks and SUVs accounted for 75 percent of June’s new-vehicle sales, and the most common new vehicle sold through the second quarter of 2020 was the Ford F-series.
More 20 Questions
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