Millennials don’t purchase new vehicles. True or False?
If you’ve paid attention to conventional wisdom over the past decade, you are likely to say true. The pundits say millennials are headed for an urban lifestyle where mobility depends on a tapestry of trains, buses and ride-share options.
Vehicle ownership? Too expensive and in some cases, too conventional, the pundits say. And, many believe the perceived millennial mindset will cast a death sentence over individual vehicle ownership and change the entire auto industry right before our eyes.
But, if you listened to the pundits and said true, you’d be incorrect.
Real-world vehicle registration data tells a vastly different story. In fact, millennials accounted for all new vehicle sales growth in the North American auto industry during the first quarter of 2018. Millennial vehicle market share jumped from 27.9 percent in Q1 2017 to 29.7 percent in Q1 2018, generation X was flat at 27.2 percent, while the “mature market” and baby boomers each lost share. The “mature market” share fell from 9.6 percent to 9 percent, while baby boomers’ share fell from 35.2 percent to 34.1 percent.
Millennials had all but been written off as a serious customer group in the auto industry. But data tells a much different story. The demographic is maturing and is now poised to be a driving force in automotive marketing. But, what’s behind millennials’ apparent change of heart toward vehicle ownership? In short, they are growing up.
In 2008 when millennials first became a market force, the auto industry and the entire economy hit rock bottom. Millennials were often woefully under employed (and in many cases unemployed), making a new vehicle out of reach financially. With an improved economy and several years in the workforce under their belts, more millennials can afford a new vehicle. Additionally, almost half live in the suburbs.
What can lenders, dealers and retailers take from the data? That they cannot ignore the millennial population. But, it’s critical for these stakeholders to analyze their local markets and make sure they’re making the best decisions and connecting with prospective millennial car buyers.
For example, in Alpena, Michigan, millennials account for just 16.5 percent of the market, while in Amarillo, Texas, millennials command 34.4 percent of the market.
While a lot can be said for gut instincts, lenders, dealers and retailers need to also leverage data and insights; it can be the key to unlocking tremendous opportunity in the sales funnel. A whole generation that may have been perceived as a segment without potential, could make or break sales goals. Making informed decisions is the basis of every business activity, and data can help the automotive industry continue to thrive.