who is in the house?

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as the composition of american households continues to shift, so will the mix of vehicles rolling off the production line.

Ah, the great American car. A nonhuman member of the family, more costly than a pet, less expensive than a child. The one part of the American Dream that actually moves. But as the size and configuration of U.S. households continues to shift, will the kinds of cars in our driveways change as well?

Automakers, start your engines.

Changes to household composition have moved into the fast lane. Less than three decades ago, traditional families - married couples with children under 18 - accounted for nearly a majority of U.S. households. Today they make up just 25 percent, or about 25 million households, and that number is not expected to increase in the next decade. Who's taking their parking spaces? More than 30 percent of households today are comprised of people either living alone or with nonfamily members; their numbers are expected to increase by 11 percent by 2008, according to projections by TGE Demographics, a forecasting firm based in Honeoye Falls, New York. In second place, the empty nesters - married couples without children at home. They now account for 28 percent of all households, and are expected to grow in number by nearly 19 percent by 2008 - the strongest growth among all household types. And don't forget the 77 million baby boomers going for the gray. Throw in shifting societal norms that have eased the stigma on (a nd raised the rates of) divorce, cohabitation, and single parenthood, and you have the makings of a dramatically reconstituted society.

What's this got to do with purchasing habits and the nearly 16 million new vehicles expected to be sold this year? As data from The Polk Company of Southfield, Michigan, reveals, it's the presence of children in the home that really determines the type of new vehicle that's driven home from the dealership.

In fact, all kinds of households with children are more alike in their new-vehicle purchasing habits than households without children, according to Polk, no matter how many parents are in the driver's seat. The reason for this is simple, says David E. Cole, director of the Office for the Study of Automotive Transportation (OSAT) at the University of Michigan: Parents are the ultimate need-driven car consumers. And what they need is a place to put those offspring and their stuff. Despite the decline of U.S. household market share by traditional nuclear families, there are still a lot of households with kids out there today: 49 percent of the nation's 70.9 million family households have children under 18 living at home, according to the Census Bureau.

Little wonder, then, that hauling capacity is king with this crowd when it comes to selecting an automobile. For each type of household with children, according to Polk, SUVs rank either first or second among new-vehicle purchases. And everyone knows who's driving the minivans: The soccer-mom mobiles accounted for 14.6 percent of new vehicles purchased by married-with-children households last year - a greater share than in any other household type. Single-parent households came in second in the minivan race - 11.5 percent of those that bought a new car went mini last year. They were even more likely to purchase a mid-size car or a pick-up truck, another popular vehicle in households with children.

And it's these big wheels - the SUVs and the trucks and the minivans - that have been hot on the highways in the past 20 years. Not surprisingly, it's the boomers, hauling around their precious darlings, who have fueled the big-wheels trend, Polk reports. They purchased 59.8 percent of all new trucks, minivans, and SUVS in the second quarter of 1999, compared to 22.1 percent by Gen Xers, and 18.1 percent by Matures. If the current light-truck growth rate was to continue in a straight line, Polk says, by 2025 nothing but light trucks would be rolling off the lots.

Obviously, that's not going to happen. For one thing, many boomers are entering the home stretch in their parenting years. Already, some have begun thinking of themselves as something other than mom and dad. Between 1993 and 1998, according to Young & Rubicam surveys,the percentage of auto buyers who identified themselves as "parent" declined by 8 percent.

And by 2008, the number of married-couple households with children will remain flat at 25 million, while empty-nester households will increase by 18 percent, to 34 million, according to TGE Demographics. This shift will have a predictable affect on automotive purchasing habits, according to "Delphi IX: Forecast and Analysis of the North American Automotive Industry," conducted by OSAT. The 1998 study included interviews with 266 CEOs, vice presidents, and other opinion leaders in the automotive industry, as well as forecasts from auto manufacturers, components suppliers, and others. Although the study does not break out results by household type, it's clear that changing household composition will alter the face of the automotive market.

Consumers who purchase mid- or large-size passenger cars or light trucks, including minivans and SUVs, are expected to have passenger/cargo space as their top priority through 2002, according to the report. But longer-term forecasts reflect the lessening grip children will have on the purchase decision. By 2008, comfort and convenience will become the most important part of a vehicle purchase decision, the report says.

But there is debate over what will happen as boomers transition out of their family years. More than a third of Michigan's Delphi IX respondents said that they did not think the truck trend would continue. Instead, they anticipate a shift to luxury cars and multipurpose passenger cars, as boomers begin to gray. On the other hand, more than half of respondents think that the light-truck trend would continue through 2008, pointing to increased disposable income from boomers, the style-and-status factor, and a continuation of lower fuel prices.

Then there's another demographic wrinkle to consider: race and ethnicity. African-American households, for example, are expected to grow by 16.6 percent by 2008, to 14.3 million households, double the rate overall. And Hispanic households are expected to grow by 36 percent, more than twice as fast as African-American households; by 2008, they are expected to number 11.6 million. Over the next decade, they will account for 30 percent of total household growth. The number of Asian-American households will also increase at an impressive pace - 36.5 percent by 2008.

And children will be a large component of these numbers. Nearly 35.7 percent of Hispanic married-couple households (who can be of any race) had children under 18 at home in 1998, followed by 32 percent of Asians, 25 percent of whites, and 18.3 percent of blacks, according to TGE Demographics. So the large and family auto market is sure to be dominated by diversity. The family years are clearly not over for minority households, and their car purchasing habits are likely to reflect that.

What are automakers to make of all this? Hedging is likely to be the name of the game, says OSAT's Cole, because kid-free homes tend to be more "fashion driven" when it comes to cars. Without children in the back seat, unfettered consumers are free to choose a car that best expresses their personality, their lifestyle, their trendiness. It makes for a fickle - and difficult to predict - future vehicle consumer base.

To complicate matters further, the number of these unfettered, fashion-driven consumers is increasing across all age groups; in addition to those empty nesters, nonfamily households are also expected to grow faster than family households, including the Xers who haven't married yet, and the Gen Ys just coming of (driving) age. The postponement of marriage means that there are more young single householders, and more young people living with unrelated people. Between 1960 and 1997, the median age at first marriage rose from 22.8 to 26.8 years for men and from 20.3 to 25.0 years for women. And many young married couples are continuing the trend of waiting longer to have children, then having fewer of them.

What are the unfettered households driving today? Mid-sized vehicles, pick-up trucks, and SUVs reign supreme, according to Polk. Huh? SUVs? Pickup trucks? Aren't they for people with kids? The answer perfectly reflects today's auto consumer mentality. Their popularity with the kid-free set is not about need, it's about fashion, experts say. That's why Stuart Karp, product planning manager for Volkswagen, sees a future in the sports-car and luxury segments, elements of which he says are already part of Volkswagen's appeal. "Boomers that are in minivans now, as their kids grow up and leave and go to college, they'll decide it's time for them," he says. Hedging their bets, Volkswagen is also developing a SUV to be released in the next two to three years, to cater to people with active lifestyles.

But as Cole points out, "It's not that people have the lifestyle, as much as that they can look like they can have the lifestyle. Appearance is more important than the evidence," he says. And that makes for a built-in vulnerability for automakers. If the notion of looking like you can go bungee jumping or mountain climbing at a moment's notice falls out of fashion, then sales of SUVs and other life-style vehicles are likely to suffer.

One answer is to take a cue from fashion and create vehicles to suit each and every consumer. Vehicle manufacturers will be forced to get into niche production, Cole says. But thanks to changes in manufacturing technology, factories will be able to plug in gaps in their production line by changing the skin and styling of a car without changing its inner workings. It will look like a new car to consumers, when it fact, it'll simply be different icing on the same cake. Of course, icing is what the fashion-driven consumer is all about. "The industry is going to be able to afford to take much more risk," Cole says. "Increasingly, it will be in a position to be far more responsive to niche demands." In fact, Polk forecasts that the new entry-level vehicle will be the "mini-SUV" segment, expected to control a 5.4 percent market share by 2004. And car companies are clearly heeding the siren call of customization. Ford and MSN/Carpoint.com, for example, recently announced an initiative called "Built to Order," designed to link custom consumer orders online with Ford's supply chain.

A word of caution: there are pieces of this prediction puzzle that are missing, and wild cards are not factored in. One household type not included in Polk's analysis, for example, is women living alone - a household type forecasted to grow 14 percent in the next ten years. As automakers factor in women's preferences, design and marketing will likely change with it. The number of Americans over 65 is also increasing dramatically, creating a new set of imperatives for auto manufacturers to consider.

And finally, there's the ubiquitous transforming force: the Internet. Not much of a factor in vehicle purchasing today, but e-commerce will certainly have an impact on younger consumer's lifetime vehicle habits, says Ben Black, vice president of Internet business development for Harris Interactive in Rochester, New York.

Amid the uncertainties, as household composition in the United States undulates under the triple tides of aging boomers, life-stage adjusting Gen Xers and Ys, and the constant march of diversity, the only sure thing for automakers is that the vehicle mix is destined to change.

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