Automakers scramble to understand the millennial generation, which is anything but homogeneous
The fate of the auto industry depends on the millennial generation. Or so it seems. The largest demographic since the baby boomers has alternatively been cited as bringing about the end of America’s love affair with the automobile, yet responsible for fueling record new auto sales.
With years of bullish auto sales expected to plateau in 2017, automakers are scrambling to understand a generation that is anything but a homogeneous demographic.
“There’s a lot of diversity, both economically and ethnically,” Michelle Krebs, senior analyst of AutoTrader, says of the generation born between 1982 and 1996. “It’s really hard to treat them as a monolith.”
Also known as Generation Y, they did not rush out to get driver’s licenses like preceding generations, they eschew car ownership with car- and ride-sharing sites like ZipCar and Uber, they don’t like the commitment of a car and all its trappings, it has been said.
Yet they account for nearly 30 percent of all new auto sales.
The only consistent attribute of millennials and car ownership is shared by every generation: Cars are too darn expensive.
“There are plenty of reasons to not buy a car, but the overwhelming reason is not because they don’t like cars,” Krebs says. “It’s because they can’t afford them.”
The No. 1 reason 57 percent of millennials are not buying cars is due to cost, according to a Kelley Blue Book study (KBB and AutoTrader are owned by Cox Automotive).
The average transaction price of a new car continues to break records year over year, reaching just under $35,000 in November 2016. That is up 1.7 percent from last year, and 7.8 percent from 2012, according to KBB.
“People who are in the market buying new cars tend to pay for all the bells and whistles,” Krebs explains.
Those bells and whistles have gotten shinier and greater in recent years. Average transaction prices have jumped over 35 percent since 2000, which was the last time new-car sales broke a record, according to estimates by AutoTrader.
During that time, median income has fallen 2.4 percent.
So as a whole new cars cost more than ever before, we’re buying them…[read the full article at www.detroitnews.com]