Conventional wisdom suggests that Millennials are all moving to urban centers, buying bikes and giving up their drivers’ licenses. But, like so many other popular perceptions, that’s not quite on target.
If anything, studies suggest that as Gen-Y ages, members of this tech-savvy generation are heading back to the suburbs, starting families and, yes, even buying cars. Indeed, new research by Bankrate.com finds Millennials more likely to buy a car than any other age group over the coming year.
“The notion that Millennials are not interested in buying a car is being turned on its head,” said Mike Cetera, Bankrate’s personal loans and credit analyst. “This is starting to shift from what we’ve seen before.”
There’s little question that Millennials have been less interested in driving than previous generations. Among those aged 20 to 24, only slightly more than three out of four held a driver’s license in 2014, according to a survey released by the University of Michigan Transportation Institute in January. Back in 1983, the figure was more than nine out of 10 Boomers of the same age.
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Renewed urbanization and an interest in transportation alternatives, including everything from bicycles to car-sharing services, have been cited as explanation. But auto industry studies have hinted at change to come, suggesting that Millennials may simply be a little slower off the line than prior generations: moving out from home later, getting married at an older age, and waiting longer to drive.
The shattering impact of the Great Recession didn’t help either, according to economic experts, disproportionately hammering Millennials with higher college debt and higher unemployment rates.
But as they age, and with the economy now in significantly better shape, Millennials appear to now have more cash and be more willing to spend it, if the Bankrate study is any indication. The research covered both car-buying and home improvements, and found members of Gen-Y, as a group, have big plans in the works.
The study, conducted by Princeton Survey Research Associates, found that group more likely to both do work on the home and buy a car than any other generation over the next 12 months.
About 24 percent of Millennials, aged 18 to 29, said they will buy a car sometime during the next 12 months, noted analyst Cetera. The figure slipped to 20 percent of those between 30 and 49, and “then it really falls off the table,” he added. Among those aged 50 to 64, for example, only 10% said they were planning to buy a car over the next year.
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Unfortunately, the brief telephone survey of 1,000 Americans over the age of 18 left a number of questions unanswered. For one thing, it focused on car buying, and Cetera conceded it’s possible older buyers — who are more likely to lease than buy compared to younger shoppers — may have answered “no,” even though they will be in the market to lease a new vehicle.
The survey also failed to distinguish between those looking to buy a new or used vehicle. In many cases, he noted, Millennials who do drive have been stuck with older vehicles that are starting to wear out, “so they need to buy something newer,” if not necessarily new.
The reality of the American auto market is that about three used vehicles are sold for each new one.
Even given the holes in the Bankrate study, however, it does suggest that Millennials are tempering their antipathy towards the automobile with nearly one in four saying they’ll be in the market in the coming 12 months. That could help keep the current car market’s record pace going just a little bit longer.