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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: 0) by Anonymous Coward on Wednesday September 14 2016, @06:30AM
Insurance.
Gasoline for 10,000 miles
Maintenance
It adds up.
(Score: 1) by tftp on Wednesday September 14 2016, @06:53AM
Insurance. Gasoline for 10,000 miles. Maintenance
Insurance: $300/yr. Gasoline: $30 mpg, 10K miles = 333 gal * $3 = $1,000. Maintenance: in this scenario = $0, as you junk the car at the end of the period and buy a new one. $9K - $1,300 = $7,700. You certainly can buy a car for less than that. I sold one of my cars, still running after 250K miles, for $700.
The figure of $9K/yr may work only if you continuously lease an exceptionally expensive, brand new car. Here are some musings [edmunds.com] on the subject of cost. They offer this table:
Leasing=$23,476/6yr, New=$18,417/6yr, Used=$15,570/6yr.
If you divide these numbers by 6 years of the financing scenario, you get this:
Leasing=$3,912/yr, New=$3,119/yr, Used=$2,595/yr.
As you can see, these numbers are less than a third of the number that is claimed by the publication - and they are talking about a pretty good car - a 3-year-old midsize sedan. A car that is 10 or 15 years old may not run as great, but it will cost you 10-20% of the price. You may have to repair it more often, though.
(Score: 2) by NotSanguine on Wednesday September 14 2016, @10:07AM
Insurance: $300/yr. Gasoline: $30 mpg, 10K miles = 333 gal * $3 = $1,000. Maintenance: in this scenario = $0, as you junk the car at the end of the period and buy a new one. $9K - $1,300 = $7,700. You certainly can buy a car for less than that. I sold one of my cars, still running after 250K miles, for $700.
That's a fantasy, at least where I live. Car insurance rates vary wildly, depending on where you live/drive.
A number of years ago when I was driving quite a bit for work (consulting with clients in a couple hundred mile radius), I was renting cars all the time, and even picking up long-term rentals. This continued for some time, so I considered buying a car.
One of the first things I did was price out insurance. I had a clean driving record (no accidents within 4 years, no points on my license) and priced out insurance for a used car. Just the minimum liability required by my state, without any fancy collision or additional coverage.
The cheapest rate I could find was $4,000/year, which put an immediate kibosh on that idea. That may have been high, even for my neck of the woods as I'd never had car insurance before, even though I was in my mid thirties.
No, no, you're not thinking; you're just being logical. --Niels Bohr
(Score: 0) by Anonymous Coward on Wednesday September 14 2016, @02:28PM
I have a pretty decent driving record, 1 ticket and 2 claims in the past 7 years. Ticket was for failure to yield.
I pay 125 a month for full coverage. Minimum coverage would be approx 40 dollars a month.
You were getting dinged because you had never had insurance before. Don't believe me? Go get a quote and check the box for no previous insurance and then run it again with a previous insurance, it is a DRASTIC difference, not unlike credit.
You score is also based on years with a license, age, occupation, marital status, and where you live. Big cities cost more cause there are more claims. Live in the boonies and its cheaper.
(Score: 2) by quacking duck on Wednesday September 14 2016, @06:59PM
I have an excellent driving record (knock on wood), going back 2 decades. No (driving-related) tickets, no claims.
$1300 a year for full coverage, on a subcompact (i.e. not sporty, and not likely to be stolen).
(Score: 1) by Francis on Wednesday September 14 2016, @11:07PM
Where you live has a huge impact on the rates you pay even before you factor in driver specifics. Just a move across town can result in rates changing as the insurance company factors in any changes in risk for theft.
I think if you live in places like New England or California you're going to get screwed on insurance. Sometimes all you can do is buy a cheaper car and not bother with collision on it.
That being said, that's one of the reasons that I ride a motorcycle, insurance is cheap and not even required. I pay about $100 a year for insurance. Next year I might upgrade the insurance policy to something nicer, but motorcycles don't do much damage typically and nobody is likely to want to steal a 250cc bike as long as I don't make it easy for them to steal.