Electronic Design

Targeting The Prosperous

People buying new automobiles predominately belong to the affluent class. In 1990, the most prosperous 20% of the population accounted for 45% of the dollars spent on new automobiles. Today, they are said to account for 60% of the automotive dollars spent and a rising share, approximately 40%, of new vehicle purchases.

At the same time, middle-income Americans are purchasing a steadily shrinking share of new automobiles. Automobile makers still sell roughly five million vehicles per year to households earning less than $50,000 annually. This is the cut-off point for the bottom three-fifths of the population in terms of income. These buyers often aren't middle-class families. Instead, they are young people whose more prosperous parents and grandparents help them with the purchase, or retirees who have considerable assets even though they don't have large incomes.

This change matters a great deal. Rather than buying bare-bones, mid-size coupes and sedans with cloth seats and nothing but an AM radio—the staple of the auto industry from the 1950s to the 1970s—they are the likely customers for the advanced entertainment systems. You can be sure that such products will adorn the new vehicles pouring into auto show rooms during the next five years.

Note that sales of new vehicles in 2000 were approximately 17.5 million, up from 17 million the year before.

TAGS: Automotive
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