Millennials have a complicated relationship with buying cars. Here are some of the trends and how they’re influencing the car industry.
Millennials, they’re a funny generation and they’re definitely unique. They seem to be shaking up the way we do lots of things. And everyone seems to have an opinion on them.
Also known as Generation Y, Millennials now make up the largest share of the US population, according to Bloomberg. Not only that, but they’re the largest generation, in 2015 there were 88 million millennials (people born between 1981 and 2000) in the US.
Because of their sheer volume and the diversity among them, they seem to get a lot of attention. Everyone wants to know how they’re going to affect the economy, politics, business, and the American way of life in general.
So of course we wondered what effect they’re having on the car industry. Millennials and car buying seems to be an interesting relationship. Looking at the information, there seems to be some conflicting views. Some people think they will be the downfall of the car industry in America, while others are saying they’re only strengthening it.
It may be too early to tell exactly how millennials will affect the car industry, or any other industry, in the long term but there’s some interesting evidence so far. So we thought we’d take a look and see what’s been going on so far.
Are Millennials Buying More Cars?
Millennials have a big amount of buying power, spending roughly $200 billion per year. So naturally, we want to know how they’re buying, what they’re buying, and how to influence their decisions.
Although some studies have shown that millennials prefer to spend their money on experiences rather than physical stuff, cars seem to be an exception. And even though they may have been late to the car-buying party due to the Great Recession, they’ve jumped in and are making up for lost time.
Millennials have increasingly been representing a larger part of the car buying market since 2010. In 2013, they represented 28% of the market and that number is expected to jump to 40% by 2020. They now represent the largest part of the car buying market, even passing the Baby Boomer generation.
One reason they could be buying more cars is because of where they’re living. As housing costs rise in big cities, more people (Millennials included) are opting to moving to the suburbs where prices are lower. Which means owning a car is a necessity for getting around, so it’s no surprise here that they’re buying more cars.
Their View of Car Ownership is Shifting
However, they may be buying more cars but that doesn’t mean they see it the same way as other generations. How Millennials look at car ownership has shifted since the generation of their parents and grandparents.
Owning a car is no longer the status symbol it once was. Millennials seem to be buying cars more out of necessity rather than desire. In fact, 43% of them see owning a car as a hassle.
Owning a car for this generation seems to be more about getting them from one point to another, rather than being a status symbol. Previous generations may have wanted to buy a car to enjoy the luxury of it, while Millennials may be buying them just because they have to.
What About Ride-Sharing?
With companies like Uber and Lyft growing in popularity, lot’s of people are wondering if Millennials will ditch buying cars all together. These easy to use services make it seem like needing a car isn’t necessary..
Early on when ride-sharing was becoming popular, many people still thought it would cause Millennials to buy less cars. In 2015 John Zimmer, co-founder of Lyft, stated that most Millennials won’t own a car by 2020. He may have been a little biased, and spoken a little too soon.
Despite the increase in popularity for ride-sharing, Millennials are still buying cars. According to Kelley Blue Book, 75% of Americans who use ride-sharing companies still plan to buy or lease their own car. In fact, it may be giving them another reason to buy cars. Roughly 15% of the millennials car buying population are planning to drive for ride-sharing companies.
So what may have seemed like the end of car buying, may be increasing it. Millennials are known to have a side hustle, with about 40% of them having a second job. These ride-sharing companies offer them an easy way to make a little extra income. And even pay for their car, which is a depreciating asset.
The car industry has started to realize this. Some companies, like Toyota and GM are even offering special financing options for buyers who plan to drive for Uber according to a study by Kelley Blue Book.
Influence Over How We Buy Cars
Even though Millennials seem to be a little all over the place when it comes to buying cars, one thing is sure, they are changing the market no matter what. The way millennials buy things, including cars, is changing how companies do business and market to consumers.
It’s no surprise that millennials tend to buy things online. In fact, in 2016, most of their total purchases were made online, according to a UPS Pulse Of The Online Shopper report. But this seems to not be true when it comes to buying cars.
A poll from MSN showed that 62% of Millennials will buy their next car at a dealership in-person. When it comes to cars, being able to see it in person and test drive it are still important factors in the decision making process. Online research is a factor, but it doesn’t make up for the need to see it before they buy.
Also, the way companies market is being influenced by millennials. TV ads and radio commercials don’t cut it anymore. That’s not where Millennials are hanging out. Social media has a much bigger influence over what cars they’re buying and from where.
Who Knows What The Future Holds
If there’s anything that can be said about Millennials car buying, I think it’s that they are unpredictable. No one can predict exactly how they will affect the car buying industry in the future. But it’s clear that they will influence it no matter what.
Some Millennials may be more inclined to buying cars, while others may be choosing to ditch them in favor of other services. And some Millennials may prefer to buy their cars online, while others still want to go to the dealership. Either way, the car industry will have to adapt to how they are selling and marketing cars.
The way Millennials do things is unlike their predecessors. So if you want to stay competitive in the market, you’ll have to change the way you do things. Being aware of how Millennials are buying cars, and their preferences will help you stay on top of the game.