Young people – Millennials between 18 and 34 years of age – are buying cars at a slower rate than their parents, but automakers continue to chase after them.
Find out why Millennials are so critical to the auto industry.
Young people are buying cars at a slower rate than their parents, restrained by mounting student loan debt, a rising cost of driving and an increasing reliance on biking and public transportation. Car companies continue to chase them, banking on the hope that today’s car-shirkers will be tomorrow’s car-buyers.
They are trying to attract the 18-to-34-year-old millennial generation through a blend of social media campaigns, video game placements and peer-to-peer advertising. It’s the 21st century equivalent of putting a Hot Wheels car into a box of Frosted Flakes.
“This audience is their future,” said Michelle Krebs, a senior analyst at Edmunds.com. “It’s absolutely critical that automakers try to get this market now.”
For automakers, the marketing expense is a down payment.
“It may be a long-term endeavor to appeal to younger drivers because a lot can’t afford new vehicles now, but they will a few years down the road,” said Ed Kim, an industry analyst at AutoPacific Inc.
Michael Sivak, a research professor at the University of Michigan Transportation Research Institute, has found a shift in the peak age of vehicle buyers — from 35-to-44 in 2007 to 55-to-64 in 2011. That trend could be here to stay and spending marketing dollars on millennials may be misdirected, he said.
Krebs, of Santa Monica, California-based Edmunds.com, disagrees, saying that early evidence shows that the rate of millennial car purchases may be picking up. The 18-34 age group fell from 14.5 percent of new-car registrations in 2008 to 10.6 percent in 2011 before rebounding to 12.4 percent last year, according to R.L. Polk & Co. The gain last year outpaced all other age groups, and millennial buyers are continuing to come back this year, Krebs said.