I’ve been reading many articles about Millennials (those born between 1980 and 2004) and their desire to own a car. Like any other market segment the answer is mixed: some will buy cars and some won’t!
Originally, the concern was whether they would ever buy a car – let alone a new one because social habits were changing. With the rise of social media channels, Millennials and the later generation have grown up with technical connections to their school friends and so the need to connect physically appeared to be reduced. In their world, chatting online is just as good as meeting up.
When I was a lad, the ability to drive was a desire simply because we could get to places without a parent or having to wait for a bus. Now, bear in mind that I was born into an engineering family, so cars, motorcycles, tractors and other machinery were everywhere and we lived out of town, which meant using a bicycle or your legs to get anywhere on your own. In this type of environment I believe that every generation needs a vehicle because car sharing / ride sharing is either difficult or non-existant.
We also didn’t have the ability to connect other than telephone or meeting up and so a car was necessary if you lived out of town. This is a critical part of the topic of Millennials and cars – urban dwellers have historically had more access to their peer group and therefore never had such a need for a vehicle. This appears to be a fact missing from most articles! Most of the articles written use surveys with a very small group – possibly 1,000 or less respondents. This is a classic approach to stories these days: ask a small group and then announce that the results are relevant to everyone in a particular age group.
I think what is happening with Millennials is normal, certainly when it comes to urban folks where owning a car maybe not that important simply because of the choices in personal transportation on the doorstep. For example, I have train, bus, car sharing and ride sharing services all around me. I do see Millennials still excited about high end cars – just as we were 30 years ago. I have seen some cars ‘n’ coffee events in Sydney with crowds of people filming the cars leaving and they are all in the same age group!
Economics and costs are certainly a factor for any generation and I think this is very relevant today. The cost of urban rentals is high and so if your disposable income is spent on rent then there may not be enough for a car loan. So this means that if rents are too high a young person may opt to live at home and use family vehicles or more public transportation systems and as such may not even learn to drive let alone buy a used vehicle. However, everyone goes through different stages of life and the needs of a vehicle come and go. Even moving out to the suburbs could mean that a car isn’t needed.
The manufacturers seem to have panicked possibly because they were seeing a gap in this market segment whilst the other segments were doing relatively OK. Interestingly, when the data was analysed, all market segments dropped at the same time with the Millennial group dropping the most. So the panic should have been about all sales! I have seen many more advertisements targeting this age group with small “city” cars and suggesting that they should go on road trips! Even the State Government is advertising new registration plate designs for them – at a cost of course.
Strangely as car sales improved over the last few years, the Millennials have been one of the stronger marker segments – possibly because the ones who still live at home have more disposable cash to spend. What I have seen is the complete opposite of what should be happening (according to the research): more optioned up cars are being sold. For example, I see a lot of younger drivers in BMW 1 and 2 series, Audi A1 and A/S3 series and A Class Mercedes with lots of extras.
Frankly the German manufacturers are making big profits out of Millennials! They seem to be the ones that have figured out how to sell to them.