{"id":72243,"date":"2016-03-13T07:39:29","date_gmt":"2016-03-13T11:39:29","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=72243"},"modified":"2016-03-13T07:39:29","modified_gmt":"2016-03-13T11:39:29","slug":"millennials-finally-arriving-car-market","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2016\/03\/13\/millennials-finally-arriving-car-market\/","title":{"rendered":"Millennials are finally arriving in the car market"},"content":{"rendered":"
\"(Photo<\/a>
(Photo from Flickr\/TuRbO_J<\/a>)<\/figcaption><\/figure>\n

DETROIT \u2013 Millennials were once a source of panic in the auto industry. Dubbed the \u201cgo nowhere\u201d generation, they weren\u2019t getting driver\u2019s licenses, never mind buying cars. Headlines declared it was \u201cThe End of Car Culture.\u201d<\/p>\n

New data suggests at least some of that worry was misplaced. Millennials \u2013 especially the oldest ones \u2013 are these days buying cars in big numbers. They just had a late start.<\/p>\n

Now the largest generation in the U.S., millennials bought 4 million cars and trucks in the U.S. last year, second only to the baby boomers, according to J.D. Power\u2019s Power Information Network, which defines millennials as those between 21 and 38 in 2015. Millennials\u2019 share of the new car market jumped to 28 percent. In the country\u2019s biggest car market, California, millennials outpaced boomers for the first time.<\/p>\n

Industry watchers say it’s been hard to get a read on millennials because the generation is big and diverse, ranging from recent college graduates to settled-down suburbanites. Automakers were also unsure about the impact of new transportation choices, like ZipCar and Uber, which helped millennials delay car buying. But as they got jobs and started families, millennials headed into car dealerships just like previous generations.<\/p>\n

\u201cThis whole idea that they\u2019re not going to need cars is absolutely ridiculous,\u201d said Steven Szakaly, the chief economist for the National Automobile Dealers Association. \u201cThe new car buyer age is just happening much later.\u201d<\/p>\n

It\u2019s a very different story from 2010, when millennials \u2013 who make up around 30 percent of the population \u2013 bought just 17 percent of new cars. Auto executives wondered aloud if the trend would be permanent.<\/p>\n

In 2011, a University of Michigan study showed a steady decline in the number of young people getting their driver’s licenses. In 1983, the survey found, 87 percent of 19-year-olds had a license. By 2010, that had fallen to 69 percent. Millennials told the study’s authors that they were too busy to get licenses and were happy to hitch rides from others.<\/p>\n

But there was more to the story. The advent of graduated licensing laws \u2013 which make teens practice driving in stages before granting a full license \u2013 was one reason millennials were getting their licenses later. An even bigger reason? The economy.<\/p>\n

For many millennials, the Great Recession hit just as they were getting their first job or graduating from college. By 2010, millennials\u2019 unemployment rate reached 13 percent \u2013 four percentage points higher than the national average \u2013 according to a report by the White House Council of Economic Advisers. For teens, things were even worse. The teen unemployment rate rose from 15 percent to 26 percent between 2006 and 2012.<\/p>\n

Millennials\u2019 unemployment rate has improved to around 8 percent. Add low interest rates and low gas prices to the mix and the car market suddenly looks more enticing to young buyers.<\/p>\n

Lucy Mueller, 26, lived in Los Angeles for eight years without a car. She took buses and trains, hitched rides with friends and used ride-sharing services like Lyft. Her commutes lasted more than an hour each way. Finally, last July, she bought a slightly used 2015 Fiat 500.<\/p>\n

\u201cNow that I have a car, it\u2019s almost bewildering to me. I feel like a grown-up,\u201d said Mueller, a project manager and video producer for financial software maker Intuit.<\/p>\n

Several things kept Mueller out of the car market. She didn\u2019t have a credit card until a year ago; without any credit history, financing a car would have been difficult. Also, like many recession-weary millennials, Mueller wanted to avoid accruing debt, so she saved enough for a substantial down payment.<\/p>\n

Szakaly says it will take millennials another four to five years to match the spending power of boomers. According to government data, the median household income for people ages 25-34 is $54,243. For those ages 55-64, it’s more than $60,000. In addition, the average 25-year-old has more than $20,000 in student debt, according to Goldman Sachs. That’s enough to buy a new Kia Optima sedan.<\/p>\n

Bret Hyde, a cameraman with Access Hollywood in New York, waited until he was 37 to buy his first car. He and his wife used to rent ZipCars or take buses to visit friends and family. It was tiresome and expensive, he said, but there wasn\u2019t much parking in their old neighborhood. After moving to a new neighborhood and renting a garage last spring, the couple bought a 2015 Nissan Rogue SUV.<\/p>\n

Sheryl Connelly, a futurist with Ford Motor Co. who studies buying trends, said even as millennials start buying cars in bigger numbers, their attitudes are different than previous generations. Owning a car and getting a driver’s license aren’t the milestones they once were, and that may be a permanent change.<\/p>\n

\u201cThe sense of freedom and independence that used to come with getting a vehicle has been arguably displaced by the cellphone,\u201d she said.<\/p>\n

Automakers have taken note. They\u2019re improving in-car technology to make it easier for young drivers to stay connected to their friends and music while they’re driving. They\u2019re forming partnerships with ride-hailing and car-sharing services and conducting mobility experiments of their own. And they\u2019re ditching things that don\u2019t appeal to millennials. Toyota Motor Corp. is axing its youth-oriented Scion brand, for example, after finding that millennials prefer the Toyota brand.<\/p>\n

\u201cMillennials are going to be the main generation we will cater to as an industry,\u201d says John Humphrey, J.D. Power\u2019s senior vice president of global automotive operations.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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