Think Millennials aren’t buying cars? Think again.
They aren’t ditching ownership altogether; they are delaying it.
The recession forced Millennials to postpone purchasing a car, but sales have recovered. More than 70 percent of Millennials owned or leased a car in 2016, according to a Ypulse survey. Millennials are predicted to be the biggest group of car owners by 2020.
The truth is that Millennials have a different relationship with cars than previous generations. Recent research indicates that Millennials see cars as more of a “need” than a “want.” They value reliability and technology over conspicuous luxury.
“Millennials buy cars more pragmatically,” Wharton management professor John Paul MacDuffie told Knowledge@Wharton. “Maybe they missed that moment as teenagers when you deeply fall in love with cars…and they are forever going to be more on the pragmatic car-as-commodity, car-as-appliance part of the equation.”
Here are some facts about Millennial car buyers:
1. In 2016, Millennials purchased 4.1 million vehicles, accounting for 29 percent of the market, according to J.D. Power and Associates’ Power Information Network.
2. Millennials are the fastest-growing segment of car buyers and will represent about 40 percent of the new vehicle market by 2020, according to Automotive News.
3. Millennials are largely buying compact cars, small SUVs and crossovers, according to Thomas King of J.D. Power and Associates. The interest in smaller cars is being driven by lower incomes and lower credit profiles.
4. According to a survey by Autolist.com, the most popular car with Millennials is the Honda Civic. The most popular truck for Millennials is the Chevrolet Silverado 1500, and the most popular SUV is the Honda CR-V.
5. One-third of Millennial car buyers chose to lease in 2016, which pushed auto leases to record levels, according to Edmunds.com.
6. Millennials value reliability over showing off with their car, notes a Ypulse study. “Millennials are not a risk-taking generation, and the recession has majorly impacted their views of luxury and conspicuous consumption,” said MaryLeigh Bliss, chief content officer at Ypulse, to Fortune. “It is not appealing to them as it was to previous generations to own a car made to show off.”
7. Forty-seven percent of Millennials plan to own their next car for under five years, according to a survey by Autolist.com.
8. “Younger buyers are more likely to view cars as technology that needs to be continually upgraded,” said Jessica Caldwell, executive director of strategic analytics at Edmunds.com, in an article on Cleveland.com.
9. Eighty-nine percent of Millennials said they would spend more money on improved software in a vehicle, according to a survey by IHS Automotive.
10. Sixty-two percent of Millennials plan to buy their next car in-person at a dealership, according to an MSN and Business Insider poll. Twenty-six percent plan to shop online for their next car.
11. Millennials value the car dealership experience because it allows them to test the physical car and get their questions answered by experts, according to Isabelle Helms, AutoTrader.com senior director of research and marketing analytics. However, Millennials are likely to avoid situations where they feel pressured to buy.
12. Millennials spend approximately 17 hours researching a vehicle before purchasing, according to AutoTrader research. This is longer than other generations.
13. Forty-three percent of Millennials said owning a car is a hassle, according to a NerdWallet online survey.
14. More than two-thirds of 13- to 33-year-olds said they would rather have a one-month trip around the world than a brand-new, fully loaded luxury car, according to a Ypulse survey.
The article is part of a series exploring Millennial behaviors and attitudes. Click here to read other installments.
This article was researched and written by Pavone. Find out more about us here.