New sales information debunks theory Millennials are uninterested in vehicle ownership.
Young buyers like cars after all.
Y is greater than X, says a new J.D. Power study on generational car buying.
Gen Y consumers now account for a larger percentage of U.S. new-vehicle retail sales than their older Gen X counterparts, according to the analysis.
Consumers born between 1977 and 1994, also known as Millennials, accounted for 26% of new-vehicle retail sales year to date. For the first time, that puts them ahead of Gen Xers born between 1965 and 1976. That group bought 24% of new vehicles in the same period.
But nobody beats the Boomers, at least not yet. Americans born between 1946 and 1964 remain the largest group of buyers, accounting for 38% of new vehicles sold during the first half of the year.
However, as older Boomers approach their 70s, that powerful consumer group slowly is losing some of its marketplace muscle.
In 2013, Boomers accounted for 40% of new-vehicle sales, followed by Gen X at 24% and Gen Y at 23%.
Gen Y’s growing presence in the U.S. automotive market is notable, because young people initially were slow to enter it.
Some industry observers had speculated the once relatively low number of Gen Y car buyers reflected a generation uninterested in car ownership, something that would have boded badly for the auto industry.
But revised theories instead indicate Millennials were late bloomers as auto consumers because of hindering economic issues. As young job seekers in particular, members of Gen Y were hit hard hit by the recession of a half decade ago. That’s abated.
“As Gen Y consumers enter new life stages, earn higher incomes and grow their families, their ability and desire to acquire new vehicles is increasing,” says Thomas King, vice president of PIN, a J.D. Power unit that tracks car buying.
They’re still not out of the woods though. They struggle more than previous generations of young people, face a lower standard of living than their parents and earn less because of fewer high-paying fulltime jobs in many fields, according to a Strategic Vision study.
Millennials can cover cell phone and Internet bills, but buying a car is out of reach for many of them right now. In time, more young buyers will purchase more new vehicles, the research firm predicts.
That’s already happening, according to 2014 data. Gen Y car buying is on pace to increase 17% for the full year compared with 2013. Gen X sales volumes are expected to increase 6%, J.D. Power says.
PIN data indicate Gen Y customers favor smaller vehicles. Those account for nearly half of their purchases. Compact cars are the most popular with Gen Y, accounting for 20% of vehicles sold to the group.
Gen X favors midsize vehicles.
Some people called Gen X “slackers” in their younger days. But that pejorative had less to do with laziness and more to do with facing a tight job market in the early 1990s. When their turn came, Gen Y had it economically tougher though.
Meanwhile, Millennial consumers are influencing the way vehicles are sold. Many dealerships have revised their sales processes to align them with young people’s buying behavior, including a heavy reliance on the Internet for vehicle shopping.
Studies indicate Millennials want upfront pricing, transparent financing and fast deliveries. Hard sells turn them off, according to an AutoTrader survey.
As they become a greater force in the marketplace, the industry must respond to their needs, “not only in terms of the vehicle design, but also the marketing, sales and service experience,” King says.