While a number of recent studies have suggested that Millennials would prefer to text rather than drive, they’re apparently beginning to buy cars, as well as iPads, in ever-increasing numbers.
In fact, Gen Y now is generating a larger share of U.S. new vehicle sales than older Gen Xers, according to a new survey by J.D. Power and Associates. But both groups still lag well behind Baby Boomers who continue to be the largest group of car buyers in the U.S.
“As Gen Y consumers enter new life stages, earn higher incomes and grow their families, their ability and desire to acquire new vehicles is increasing,” said Thomas King, a J.D. Power vice president.
According to U.S. Census Bureau data, there are about 80 million Millennials, which means that each year millions more are moving into the new vehicle buying demographic. Another study by consulting firm Deloitte last year found they already represent about 40% of the nation’s potential car buying population – though they are still well outnumbered by Boomers when it comes to the number of new vehicles sold each year.
Separate research by the University of Michigan Transportation Research Institute, or UMTRI, found that nearly a third of 19-year-olds hadn’t gotten a driver’s license, compared with just 17% of Boomers in 1983.
“Virtual contact reduces the need for actual contact,” UMTRI’s Michael Sivak said as one possible explanation.
But analysts have pointed to other factors, including:
- Increasing availability of mass transit in cities where members of Gen-Y have increasingly been settling;
- Economic realities of a generation saddled with high unemployment rates and huge student loans;
- Indifference to driving in an era when so many of the nation’s roads are over-crowded.
That said, some analysts and industry leaders have downplayed reports that Gen Y would stay out of the market. Joe Hinrichs, Ford’s President of the Americas, recently told TheDetroitBureau.com that car buying was as much as anything a “life stage” issue, and that even for those Millennials living in urban centers, vehicle ownership would become increasingly critical as they aged and started families.
The new J.D. Power data seems to support that theory. Based on Power’s PIN network, which tracks dealer sales trends, those born between 1977 and 1994 have collectively accounted for 26% of U.S. new vehicle retail sales this year.
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That makes Gen Y a larger buying group than Gen X for the first time. Those born from 1965 to 1976 accounted for 24% of sales for the same period.
Boomers, however, still dominated, commanding a 40% share of the retail automotive market this year.
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That said, Power’s King cautioned that automakers should not take Millennials for granted, simply waiting them out as they settle into more conventional lifestyles.
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“As new-vehicle demand among Gen Y consumers increases, it will be important for automakers to respond to the needs of these consumers, not only in terms of the vehicle design, but also the marketing, sales and service experience.”
Indeed, the industry has been making a number of changes in a bid to lure in a tech-savvy generation. It is becoming increasingly difficult to find a new vehicle that doesn’t offer a high-tech infotainment system, for example, some going so far as allowing a motorist to have Facebook postings read out in artificial speech. Chevrolet is, meanwhile, one of several makers adding 4G WiFi hotspots in many of its vehicles this year.
Whether that will be enough to bring back other reluctant Millennials remains to be seen.
Tags: Gen X car buyers, Gen-Y, J.D. Power car sales survey, J.D. Power survey, Millennial car sales, TheDetroitBureau.com., auto news, baby boomer car sales, car buying news, gen x, gen y car buyers, new car buyers, new car sales, paul a. eisenstein, thedetroitbureau