Will Millennials Change How Cars are Bought and Sold?
Driving Sales News asks: Where have all the drivers gone? Something shifted with regards to our driving behaviors during the mid 2000’s and we simply started driving less even though the population continued to grow.
The Reuters staff suggests: This trend is reflected in vehicle ownership, which has decreased by 4 percent between the all-time high of 1.24 vehicles per driver in 2006 and now.
The percentage of driving-age Americans with licenses also fell to a 30-year low of 86 percent in 2011 from an all-time high of 90 percent in 1992.
Editorial comment: And so we ask, could Millennials have something to do with it?
Consider this statistic: Today’s 20-something Amercians drive approximately 20% less today that their parents did while they were in their 20’s.
The question remains though, what happens when this segment of the population ages, moves out of their parent’s houses, enter the professional workforce and start their own families? They will eventually need vehicles. And when they do enter the market it could create a much needed buying spree. Or, will their historical activities and future needs create a new standard of automotive shopping behavior and disrupt the retail industry even further?
Millennials are becoming “the new face” of American auto buyers, asserted Jim Farley, Ford Motor Co.’s global sales and marketing chief, during his keynote speech at the auto show. “And we’ll be surprised,” he added, “by what they choose.”
But Lacey Plache of Edmunds.com says: Millennial Behavior Suggests They Might “Like” Cars after All
Plache: it was good news for the auto industry when the Millennials showed the first signs of a comeback in 2012. New car purchases by Millennials not only grew with the rest of the market but Millennials actually outpaced all other age groups (except the 75 and over buyers) and thereby increased their share of sales as well
Increased new car buying by Millennials is not the only good news for the auto industry. What they are buying is also encouraging — specifically, luxury and sports cars. Even though the Millennials’ overall share of sales is smaller, in every income group except the highest ($150,000 and over), aged 25 to 34 Millennials buy luxury cars to a similar extent or more as older buyers with same income. Plus, in nearly every income group, 18 to 24 year old Millennials purchase a greater share of entry and midrange sports cars than the older buyers.
And, although Millennials still substantially under-buy compared to their share of population, the gap between their population share and their share of new car purchases is shrinking.
Bottom Line comes from Reuters: That has led major automakers, including General Motors Co., Ford Motor Co. and Toyota Motor Corp. to rework their lineups with different body styles and more tech-savvy features aimed at drawing young Americans’ interest.