Mr. Savage, as usual I think you've hit the nail on the head here. And given (a) and (b), the designers probably sighed and said "no great loss" because they think that their radio will skew younger than the average AM listener. They may be wrong about that one - that's what Toyota thought when they came out with Scion and now the average buyer is in his 40s!
Actually, there is no "average" Scion buyer. There is a youth group, the intended market. And there is a bonus group, which Toyota did not plan on; people in their 50's and above. They buy them because the door swing and the seat height are excellent for people with some mobility issues or arthritis and such... who find conventional sedans uncomfortable to get into.
On the other hand, ALL of AM's audience is concentrated over 50, and there is just about zero interest in younger demos. So if you make a radio for people under 50, why spend money on a feature that will never be used? Sansa MP3 players were the first with radios, I believe. No AM. Now things like the Zune have radio, but no AM.
David, I should have phrased it better. What I meant to say was the average
age of the Scion buyer is 45. Which was a surprise to Toyota. Yes, they get the younger group - but those are outnumbered by empty nesters or what you referred to as the "bonus" group. That group actually buys more of the Scion brand than those in their 20s.
Another example of how the older demo and its deep pockets was ignored. But I digress as that's another debate, right?

Given your reasoning about AM's demos (which I do not argue with), why bother with IBOC on the band anyway? It doesn't attract younger listeners but it does have the potential to piss off the older ones.