With the oldest millennials now well into their forties, they should be buying cars en masse. They’re now at the stage in their careers where they can afford to treat themselves to personal transportation and give up on bicycles and buses.
But when you look at the statistics, that’s not what’s happening at all. As a group, millennials seem to be outright refusing to get involved in the car market. They don’t want to drive in anything like the same numbers as their boomer parents (who almost dedicated their lives to vehicle ownership).
The figures bear this out. Auto sales are holding steady, but demand among those in the younger generations is actually falling by around 12 percent, according to some estimates. What’s even weirder about this is the fact that car companies know how to appeal to younger audiences. They’ve been doing it for decades. But this time, they seem to be failing. Queues of under-forties are not lining up outside dealerships, waiting patiently to get their hands on the latest models. Millennials aren’t pinning posters of beautiful vehicles to their bedroom walls. They’re just not that interested.
But why is this happening?
That’s the billion-dollar question and something that the auto industry is desperately trying to figure out. If executives can figure out why a whole generation of people isn’t buying, then maybe they can solve the problem before it becomes even more serious.
The good news is that there are some answers out there. They’re just not particularly obvious.
Millennials Don’t Have As Much Money
To make a lot of money, you need to have a good work ethic and get into prime working age at the right time, preferably when the economy is booming and everything is going well. That didn’t happen for millennials. Most got into the labor market just as the financial crisis hit and then had to deal with COVID-19 just a decade later, right when many of them were just getting their careers started.
Because of this, the entire generation is behind where it should be at this stage in its lifecycle. Career years lost early on are taking their toll now, meaning lower pay than previous generations at the same age. Given that vehicles are a significant expense, many millennials have decided not to bother. They’d rather give up personal transportation in exchange for more vacations, gadgets, and time off work.
Interestingly, this approach by millennials demonstrates a degree of responsibility. Unlike generation X before them, millennials appear to be slightly less willing to buy things that they can’t afford, preferring to save for the long-term. Perhaps that’s a good sign.
Millennials Live In Cities
Then there are various lifestyle factors, such as the fact that millennials have a penchant for living in big cities. Bicycling, public transport, and walking are their preferred methods for getting around so owning a car seems surplus to requirements. If they need to get out of the city for whatever reason, they can hire a car or go on the train – whichever is easier.
Millennials aren’t great travelers, either. Compared to previous generations, they are much less willing to leave their place of birth (or live a long way from it). They are also considerably more likely to work from home compared to previous generations, thanks to recent changes in the labor market.
The basic need for a car is also lower. Boomers used their vehicles to go to the store or meet up with friends. Millennials have online shopping and TikTok for that. Moving around in the physical world is becoming progressively less important.
Millennials Don’t Expect To Drive
Then there are the generations’ expectations. Many millennials don’t expect to drive, either now or in the future. Therefore, many aren’t bothering to get driving licenses or even prepare to become motorists. Even if the generations’ finances improve as they take up more senior positions vacated by boomers and gen Xers, the situation might not change. Cars may remain just as unimportant to them as they ever were.
Millennials Fear The Consequences
Then there are the various moral arguments against vehicle ownership, something that millennials pay a lot of attention to. Many young adults don’t want to own cars because of their impact on the urban environment and the ecology as a whole. Millennials want to lead low-footprint lives, reducing their reliance on conventional car transportation as a whole.
For many cars are dangerous, something that any car accident lawyer can attest to. People get injured or die in vehicles all the time, thanks to lax safety laws and the fact that anyone can drive a vehicle at any time. Most would prefer to use safer modes of transport, such as riding their bicycles through the park or taking the train.
Then there are the emissions issues. Millennials were the first generation raised entirely on green issues, so environmentalism is close to their hearts.
Perhaps the saving grace here is electric, self-driving vehicles. Perhaps they would encourage millennials to put their hands in their pockets. But whether those vehicles will be ready in the next twenty years is still an open question. Millennials might be retiring by the time they arrive.
Conclusion
The automobile market is already facing numerous pressures. Supply issues, COVID-19, and chip shortages are all taking their toll. Fundamentally, though, these are short-term problems. By contrast, the lack of millennial interest in motor vehicles is a long-term issue that might not go away.
If it doesn’t, the automakers will need to rethink their business models. We could be moving away from the era of universal vehicle ownership to a different transportation model. And that’s a funny thing to think about. Already many millennial-dominated European cities are doing just that, making it virtually impossible to own a car. And others in North America could follow suit. Once millennials get into serious positions of power, they could also change politics and this could mean the death knell for conventional car ownerships. The saving grace might be electric vehicles, but even then, millennials might decide that there are better options on the table.