Another week, another data set about millennial car-buying trends, this time refuting the predictions and analysis that have confounded car companies and their marketing gurus these past few years.
It turns out millennials have not forsaken the car altogether for multi-modal urban transit, for bicycles, for lifts with friends, for …whatever. It also turns out, according to J.D. Power’s Power Information Network—defining millennials as those between 21 and 38 in 2015, millennials bought four million cars and trucks in the US in 2015, thereby inflating their share of the car market to 28 percent, second only to the ‘baby boomers’.
And… it turns out that in California, the largest car-buying market in the US, they have actually out-bought boomers for the first time.
Why this ‘sudden’, seemingly unexpected trend reversal? Industry analysts say trying to get a read on this big and diverse generation has been difficult. Whether or not millennial ‘lifestyle preferences’ would emulate the boomer generation, whether or not they fully embraced the new urban transportation options, …turns out these questions were difficult to answer.
Some analysts, like Steven Szakaly, Chief Economist for the National Automobile Dealers Association, say it was just a matter of timing: “This whole idea that they’re not going to need cars is absolutely ridiculous. The new car buyer age is just happening much later.” While the number of young people getting their driver’s licenses has been steadily trending downwards since 1983, graduated licensing laws and insurance costs were extending the difficulty and expense of this starting point.
Importantly, the economy in general has been challenging. The 2008 recession hit just as millennials were in or graduating from post secondary education, and starting or at least looking to start their first job. By 2010, their 13 percent unemployment rate was four points higher than the US national average, according to a report by the White House Council of Economic Advisers.
Teens had it even worse at 26 percent unemployment by 2012. Now the millennial unemployment rate is down to eight percent, interest rates have stayed low, and gas prices are down. The five year economic forecasts match millennial spending power with that of boomers. Millennials are getting jobs and staying employed, and getting married and starting families, and even moving to the suburbs just like previous generations. It appears that the convenience offered by car ownership is still irresistible.
Nevertheless, some analysts, however, are sticking to the earlier analysis about a continuing decline in popular interest in motor vehicle ownership. They say: getting a driver’s license is not the milestone it used to be, car-sharing and Uber-hailing are increasingly popular options, and the sense of freedom and independence previously found in car ownership now comes from wireless connectivity.
The word wireless turns the discussion to the features that millennials want in their cars and, hence, that the car companies want to provide —improved in-car technology to enable young drivers to stay connected to their friends and music while driving, features that take attention away from the task at hand – driving safely.