Growth in the North American vehicle buying population is set to drop to its slowest pace in 50 years as the baby boom generation retires and cuts down on driving, according to a report by Scotia Economics released on Friday.
Boomers, those born between 1945 and 1963, who account for 60 percent of all drivers in the United States and Canada, are heading into their golden years. At the same time, the number of drivers in the 16 to 29 age group, is increasing at the slowest pace since the mid-1960s, the report said.
The North American auto sector is in recovery mode after one of its worst ever cyclical downturns. U.S. and Canadian sales are expected to top 13 million vehicles in 2010, up from 11.9 million last year, but well below the sector's peak of 17.4 million earlier in the decade, said Carlos Gomes, an economist at Scotia Economics, and author of the report.
"However, unfavorable demographics, including the retirement of the baby boom generation, will dampen vehicle demand over the coming decades, leaving the industry increasingly dependent on replacement demand," he said.
Growth in the North American vehicle buying population will fall to 0.6 percent per year in Canada over the coming decade, and only marginally higher in the United States, from 1.4 percent over the past 50 years, the report said.
"Growth in vehicle buying population has already been slowing since 2007, but the downturn will intensify, and remain in place through 2030," said Gomes, adding: "the sharp fall-off in driving by retirees will have an enormous negative impact to new vehicle demand."
The number of North Americans 60 years or older is expected to surpass the population of young car buyers by 2013.
Gomes said that vehicle replacement will become more important to the auto industry over the next few years, as nearly half of the 250 million cars and trucks on the road in North America are at least 10 years old.
