But we won’t be left blowin’ in the wind
It seems that you can’t pick up a newspaper, watch the news or check out your favourite all-news website these days without reading about the first of the baby boomers turning 65.
Financial planners are viewing this as a bonanza for their businesses. Investment houses are releasing survey after survey announcing that indeed those turning 65 have differing needs and wants. Many predict doom and gloom predicated upon financial unpreparedness while others are predicting radical change to the concept of retirement from the ‘Freedom 55’ vision we all apparently have and were counting on.
I am amazed at how the media have picked up on this transition and how dominant this news is. It’s as if no one has thought about it before. A sign of the poor economic times and grasping at straws I suspect.
Demographic shift
For those of us in the car business, demographic shifts have always been at the forefront of our planning. After all, cars are built for people and the industry has paid close attention to demographics. Our regular market reports talk about such things as white picket fences, electric avenues, blue-collar comfort and the like. Understanding the make up of demographics in our local markets has helped us to be better dealers over the years.
We are however entering into some fundamental shifts in Canadian population that will have a long lasting impact on each of our businesses. Some will be positive and others could be potentially negative.
The structure of our population has been shifting for many years and has evolved to
the point where we will soon have more people over 65 than under 16. Our death
rate will outpace the birthrate, thus leaving 100 percent of our planned population
growth coming from immigration.
This will have a significant impact on two things of interest to dealers: working age population and driving age population.
Working age population
For decades it has been a fact that working Canadians need a vehicle to facilitate their career demands. When the shift happened where most households required two incomes to make ends meet, a second car was almost always acquired. Once a family acquired two vehicles, they very rarely dropped back to one when family circumstances changed back.
This reality drove vehicle sales and service opportunities for dealers. And that opportunity was further expanded when teenagers starting working and many families acquired a third vehicle.
The baby boomers are a large demographic band that continually accessed resources as time went on. Now that the boomers are reaching 65, will this change? In many ways, yes. However, in many ways, no.
As I see it, the working age population will shrink as baby boomers begin to leave the work force. This has some serious implications for the future tax base and taxation levels as well as disposable income. But that will be the subject of a future article.
Driving age population
The baby boomers are not going to stop driving. Many will not stop working and will prolong their retirement date for as long as they can. Others will not give up the freedom and independence that a vehicle provides. I don’t believe that we will see a significant drop in vehicle usage among baby boomers until individual medical conditions dictate a reduction in driving.
In the short-term therefore, say 10 to 15 years, this will mean an increase in the driving age population, as the population of Canadians from 16 to 80 steadily increases.
Canada’s population is projected to increase from its current levels of 34.2 million to over 40 million by 2031. This means that the driving age population will grow naturally but does not necessarily mean that our percentage of vehicles on the road per driving age population will increase at the same rate.
There are now approximately 75 vehicles on the road for every 100 Canadians of driving age population. Although we expect this number to increase it is entirely possible that it could remain flat or actually decrease in some parts of the country.
Large cities for instance, where migrants historically have concentrated, may very well not see an increase, as citizens opt instead to use public transit. Others may well use the car sharing concept that is growing in popularity.
Impact of technology
Worker and employer behaviour could also have an impact of the need for a vehicle. Technology will continue to evolve and will
continue to make being present at a physical location obsolete for certain industries and job classifications. Even in this situation however, there will be a need to meet face to face once in a while; thus these digital nomads will still need access to transportation and many will choose the independence and flexibility of their own vehicle.
Much has been said and written recently about changing vehicle technologies. Electric vehicles have been touted as the inevitable next development stage. But the fact is that consumers are price sensitive and until electric vehicles can meet the consumers’ value equation, we will not see a huge movement in consumer behaviour and thus demand.
What we will see is the continued evolution of better fuel efficiency, through multiple technological advances, combined with increased information and consumer technology in our vehicles.
Consumers have been conditioned to want the latest and the greatest consumer technology. The practical lifespan of many electronic products is under three years. Many consumers constantly want to be up to date with the latest most advanced technology and for those folks, 18 months is an eternity.
What we will see in the next 10 to 15 years is the convergence of consumer and vehicle technology. The consumer technology will have mass appeal to generations X and Y and niche appeal to baby boomers.
Demographics is a fundamental of our business. Consumer electronics have become a fundamental part of Canadian life. The marriage or convergence of the two cannot help but bode well for our industry going forward… providing we prepare and adapt.
