17 percent said their children purchased their first car for themselves
Parents say they are much more likely to buy their child’s first car than their parents were to buy their own first car, a trend experts say signals increased costs for usable vehicles that can potentially teach bad saving habits for children.
AutoTrader.com surveyed parents with children of driving age and found that while 14 percent said their parents had purchased their first car, 41 percent said they bought their child’s first car for them.
Experts credit the significant change to a number of factors, including increasing prices for used cars, community pressure to provide a car for a driving child and allowing children to drive themselves to ease a parent’s busy schedule.
Others warn that the increase in parent buying could make children feel like they don’t need to save money.
“It’s not an obligation, it’s a gift, and it’s an individual choice,” said Bill Schretter, president of the Financial Planning Association of southwest Ohio and a financial adviser at Raymond James Financial. “I’ve seen people go into debt for their kids, and sometimes it’s an issue of consumerism. If a child needs a phone, they sometimes go out and get an iPhone or the most expensive type. There are ramifications there.”
The increase in parent buying has not led to an increase in overall used cars sales. According to the Bureau of Transportation Statistics, the number of used cars sold dropped from 42.6 million in 2006 to 36.9 million in 2010. Some local school districts have seen more carpooling or students finding other ways to school, which some say could also be tied to gas prices.
At Miamisburg High School, for instance, the number student parking passes issued dropped from 419 in 2004-05 to 312 last school year, said principal Craig Morris.
“I think more students are riding with other students,” Morris said. “I’ve heard some parents say that’s one of the reasons they might consider (getting a child a car), so they can drive the other kids.”
When contacted by this newspaper and asked about the results of the AutoTrader.com survey, Jim Mitchell, executive director of the Ohio Independent Auto Dealers Association, surveyed his members by email. The response indicated that dealers in Ohio are also seeing more parents putting up money for a child’s car. Some are even finding unique ways to get the children involved.
“I have one response here that says a parent came in to buy a car, and (the child) thought he has making a payment,” Mitchell said. “The parent was going to put that money in a savings account. Then, whenever he paid the car off, (the child) got a check. That’s a good idea, I like that.”
Some don’t ask the child to be part of the payments at all. Dealerships in the region said they sometimes see parents overcome with community pressure to make sure a driving child has a car. The children can also sway the decisions.
“My perspective is if I’m a parent and I’m getting you the car, I’ll buy what I want,” said Jay North, owner of Springfield’s Jay North Auto and the OIADA chairman. “You wouldn’t believe how many parents come in and we try to sell them in their budget and they say, ‘Well, she won’t like green.’ A lot of times the parents let the kid have more input that maybe they should.”
With used car prices trending upward — the average cost went from $8,009 in 2006 to $8,786 in 2010 — parents will likely continue to be heavily involved in purchases. Experts said they hope those parents encourage the children to save, even if they are providing most or all of the money.
“If they start (saving) at about 14 years old, that’s a wonderful strategy for kids,” Schretter said. “Maybe for every dollar the child saves the parent can put in a dollar. That way, the kids work, save and appreciate it. That’s the greatest gift a parent can give to a child, an appreciation for work.”