Car Industry Focuses on Luring Younger Buyers as Millennials Shift Attitudes on Car Ownership
For years, we have been reading articles about how teen licensing rates are falling (from 88.6 percent in 1996 to 71.2 percent in 2015). We have also seen much hand wringing about millennials forgoing car ownership in favor of ride sharing. But, recent data suggests that younger generations are buying cars—they just started later than their parents. In fact, millennials accounted for 28% of new car sales last year.
Car manufacturers have been setting their sights on how best to market to younger car buyers. Younger generations do significantly more online research and take longer before making a car commitment, according to a study by Autotrader. Millennials have also shown a strong affinity for crossover SUVs, and car companies are responding by increasing their offerings, as evidenced by the plethora of new cars showcased at this year’s auto shows. According to USA Today, a Toyota sales executive predicts that crossovers and SUVs will account for 65% of sales in the near future.
Younger car buyers also have different plans for their cars. As reported by the Washington Post, research firm Mintel found that 1 in 6 millennial car buyers plan to drive for a ride sharing service. The same study showed that 84% of millennial car buyers plan to buy a new car, rather than a used car—perhaps not a coincidence that ride sharing services require their drivers to have newer cars.
Millennials’ growing interest in car ownership is a bright spot in the automotive industry, even amid dimming projections for future industry growth, as we wrote about earlier this week.