A recent article in the Atlantic reported a worrisome trend in automobile retailing: namely, that young people aren’t that interested in buying cars.
According to CNW research, only 27 per cent of 21- 34 year olds (Millennials or Gen Yers) purchase new cars today, compared to 38 per cent in 1985. And the number of drivers, aged 19 or younger, who currently have a driver’s licence is down two thirds from 1998.
Why are fewer young people interested in buying cars today? There are no shortage of theories and explanations. Some blame the poor economy and a lack of good-paying jobs for young people graduating from college and university.
Many people in their twenties are emerging from post-secondary education, saddled with student debt and dim-looking employment prospects. The thought of incurring more debt by purchasing a car, without the means to pay for it or the high cost of auto insurance, could make younger buyers skittish about making that kind of commitment.
In many cases, Millennials claim they are holding off buying a car until the economy improves or until they have no other choice.
Some might argue that some Millennials have the financial means to afford a car but have chosen not to own one. According to a recent Pew Research study, roughly 30 per cent of Millennials are moving back home with their parents after graduation, which would provide them with more financial flexibility.
Some auto industry observers point to the Internet and social media as the culprits. You don’t have to be a social scientist to realize that a majority of young people today are more disposed to connecting with friends online instead of leaving their home.
If you’re the parent of a teenager or a Millennial, you’ll know the endless hours that this generation spends connected to smartphones, gaming consoles and social media sites. For better or worse, their “virtual” worlds have become a substitute for the real world.
Times have changed since I was a young adult in the 1970s and ‘80s. Back then, obtaining a driver’s licence and a car was a rite of passage, especially among young males. It used to be that getting a driver’s licence was your ticket to freedom, which provided the means to socialize in person with friends, date, attend concerts or go camping.
Today, the desire for young people to connect with friends is as strong as ever, but now it’s done with a few keystrokes. Buying a car, filling it with gas, maintaining it, paying for insurance and fighting traffic — it might seem like a colossal headache compared to sending a few text messages.
While young people have been avoiding showrooms in droves, automakers haven’t been sitting idly by. They’ve known about this trend for years and are now producing cars aimed directly at Millennial buyers, with fuel-efficient engines and high-tech gadgetry (voice-activated music search and audible text messages).
Every auto manufacturer now offers at least one gas-electric model in its lineup, with an array of conventional hybrids, plug-ins and battery-electric vehicles to follow.
This preference towards smaller, fuel-efficient vehicles is supported by studies (Deloitte) that have found Millenials to be far more environmentally conscious than consumers in any other age group.
At my Hyundai dealership, some of the above trends hold true. Although we’re not seeing fewer Millennial buyers than statistics would indicate, we are seeing young buyers who are more interested in a vehicle’s price, fuel economy and environmental footprint than they are on speed and horsepower.
In the months and years ahead, it will be interesting to see whether these trends among Millennials continue. Whatever happens, you can bet that automakers are paying close attending to this demographic.
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