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Auto manufacturers today are scratching their heads, trying to figure out why the millennial generation has little-to-no interest in owning a car. What car makers are failing to see is that this generation's interests and priorities have been redefined in the last two decades, pushing cars to the side while must-have personal technology products take up the fast lane.
It's no secret the percentage of new vehicles sold to 18- to 34-year-olds has significantly dropped over the past few years. Many argue this is the result of a weak economy, that the idea of making a large car investment and getting into more debt on top of college loans is too daunting for them. But that's not the "driving" factor, especially considering that owning a smartphone or other mobile device, with its monthly fees of network access, data plan, insurance, and app services, is almost comparable to the monthly payments required when leasing a Honda Civic.
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With recent studies showing a huge decline in auto sales among the millennial marketplace, it's no wonder auto manufacturers are in a mild state of panic, realizing they're missing out on a generation that wields $200 billion in purchasing power. Numbers don't lie, and over the last few years statistics have shown a significant drop in young people who own cars, as well as those with driver's licenses—and that decline continues among the youngest millennials, meaning this is not a trend that's going away anytime soon. From 2007 to 2011, the number of cars purchased by people aged 18 to 34, fell almost 30%, and according to a study from the AAA Foundation for Traffic Safety, only 44% of teens obtain a driver's license within the first year of becoming eligible and just half, 54% are licensed before turning 18. This is a major break with the past, considering how most teens of the two previous generations would race to the DMV for their license or permit on the day of their 16th birthday.
(Score: 4, Insightful) by slinches on Wednesday September 14 2016, @01:03AM
The reason that the younger crowd aren't buying new cars is because they are priced out of the market. Even the cheapest econobox is $12,000 or more and nearly $20,000 to own over five years. That can buy you quite a few Uber rides.
The only way I see the trend changing is if something like the Elio can get into production. Simple, reliable transportation is almost completely unattainable for those with low or even moderate means. If a car can sell for under $8000 and get 2-3x the mileage of the average new car, then there's a market. Until then, only those with the disposable income to plunk down $20k plus on a car will be able to afford the freedom of owning their own transport.
(Score: 0) by Anonymous Coward on Wednesday September 14 2016, @01:29AM
If you live in a city (most people) and don't actually need the car every day (most people who don't already own cars) then car ownership is almost certainly a waste of money. Beyond the initial purchase price there are ongoing costs associated with the vehicle.
Then you just rent/borrow/carpool on the occasional days you need it.
(Score: 3, Informative) by AthanasiusKircher on Wednesday September 14 2016, @01:33AM
The reason that the younger crowd aren't buying new cars is because they are priced out of the market. Even the cheapest econobox is $12,000 or more and nearly $20,000 to own over five years. That can buy you quite a few Uber rides.
This may be a reason for not owning a NEW car. But what about owning a CAR in general, e.g., a used car?
That's an interesting shift too. Talk to the baby boomers about their first cars -- unless they were a "rich kid," they didn't have new cars. They got cheap stuff that was a decade old if they were lucky. My parents bought their first new cars when they were in their 40s.
Young people have ALWAYS been somewhat "priced out" of new cars. There was a trend beginning in the 1980s through the early 2000s when for some bizarre reason young people were convinced to take on huge amounts of car debt as a matter of course to own a new car, but that was an aberration. Young people today are less likely to fall into that particular debt trap -- probably because of a combination of student loan payments and cell phones, which collectively probably add up to the car payment most people used to make. The interesting thing is that they are refusing to go back to their parents' practice of buying used older, but still reliable, cars.
(Score: 2, Insightful) by Anonymous Coward on Wednesday September 14 2016, @01:56AM
The 'cheapo' car does not exist right now. Unless you are very lucky. My friend found a 1998 f150 for 900 bucks. It needed ~1500 bucks worth of work (4k if he had taken it to different car shops). However, now he has a truck worth ~2500. *lucky*. Sometimes you find the 'grandma' car. The car where some old lady bought it 2 months before her son died and then parked it in the garage. Basically new but out of date. Those are rare and usually snapped up by dealers.
Cash for clunkers destroyed the crap box market. They just dont exist. Right now the best you can do for an 'ok' car is in the 2-4k range. Usually outside of the range of people starting out. The 500-1500 market is basically empty. It will probably be 5-10 years before that straightens itself back out.
You nailed it spot on how most people did cars.
(Score: 0) by Anonymous Coward on Wednesday September 14 2016, @05:26AM
What? Plenty of old cars for $500-1000 here. If you're mechanically inclined you can choose one that isn't on its last legs and get a good deal, fix it up for a few hundred. If you're not mechanically inclined you're gonna get screwed by everyone. This is how cars have always worked.
(Score: 2) by Scruffy Beard 2 on Wednesday September 14 2016, @02:25AM
New cars are made out of plastic, which starts getting brittle after about 7 years.
The appeal of a clunker drops when you just know the whole thing is falling apart.
My current apartment building also has one parking space of every two apartments.
Recently, the price of downtown parking spaces dropped about 30%: now only $200/mo instead of $300/mo.
(Score: 2) by slinches on Wednesday September 14 2016, @05:41AM
Have you priced out the used car market recently? To get a decent used car with low miles will cost at least $6000-8000 from a dealer that will offer a short warranty or about a thousand less from a private seller as-is. And for that price it will be a later model vehicle that gets mediocre mileage.
We need something to be available that will cut that cost in half. I don't see anything on the used market now that fits the bill, so it will need to be a new vehicle. And once this new low cost vehicle establishes its own used market, the threshold will be dropped even lower.
Right now, the choices are to buy an expensive car and then live far out from the city center to maintain a decent standard of living or eschew the costs of a vehicle and instead pay the exorbitant rent/real estate prices to live in a city, close to public transport and entertainment. Those are both expensive. The quality of life for anyone who currently can't afford either of those would be greatly improved with access to much more affordable personal transportation.
(Score: 0) by Anonymous Coward on Wednesday September 14 2016, @02:48PM
How about something new, with a warranty, that gets outstanding mileage?
https://www.eliomotors.com/ [eliomotors.com]
I do not work for nor have a financial interest in the company, I just think it's a good idea.
(Score: 2) by Scruffy Beard 2 on Wednesday September 14 2016, @08:33PM
I gave up when that site had a "loading" screen.
(Score: 0) by Anonymous Coward on Wednesday September 14 2016, @01:50AM
The mere fact Millennials consider priced out of the market the inability to purchase one of the most expensive products new tells you more about their head space than anything market wise.
Not to mention the means to maximize a purchase like an Elio would be to do most of the maintenance yourself, but that requires tools (let me guess, you're priced out of the market for a decent socket set as well), knowledge (ditto a copy of the pertinent Chiltons), and a place to work (guess you really can't do repairs without a garage with a full lift either. Let me see that houses for sale listing again).
We get it. Uphill. Both ways. And had to share a single grain of rice between your roommates.
(Score: 2) by fritsd on Wednesday September 14 2016, @10:02AM
$20 000 for a new car. you can buy a small crappy house for that.
I'm not joking:
hemnet.se [hemnet.se]
(Score: 3, Touché) by tangomargarine on Wednesday September 14 2016, @02:19PM
How is linking to a Swedish housing site relevant in this discussion about the U.S. car market?
"Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"