A study by Edmunds on the buying habits of millennials shows that 2013 was not a particularly good year for young car buyers. Despite making good headway in 2012, 2013 saw those gains practically eroded, as a weak job market and rising home prices helped stymie any growth in market share for automotive consumers aged 18-34.
The Edmunds study adds support to the two major points that Generation Why has been propagating from the start: that the lack of interest in cars among young people is largely rooted in poor economic prospects, and that their interest in the automobile goes beyond utilitarian considerations
Millennials’ car-buying patterns in 2012 and in 2013 both lend support to the theory that their weaker car-buying compared to previous generations stems from economic constraints rather than from a preference to not drive. Plus, what they bought in 2013 continues to suggest that Millennials do see cars as more than a means to get around. Even with their decreased share of overall sales in 2013, Millennials did not slack off on buying luxury and sports cars. The share of Millennial purchases from the luxury segment increased slightly. And, in every income group except the highest ($150,000 and over), aged 25-to-34 Millennials continued to buy luxury cars to a similar extent or more as older buyers with same income. Likewise, in nearly every income group, 18-to-24 year old Millennials continued to purchase a greater share of entry and midrange sports cars than the older buyers. These Millennial buying choices suggest an interest in cars that will translate into more purchases when economic conditions allow, just as in 2012.
Edmunds Chief Economist Lacey Plache raises an interesting point: new car sales among young people could continue to disappoint as the economic recovery passes them by. If this is the case, then OEMs should being to take notice. Not just that the oft-cited meme of “kids aren’t into cars” is false, but that a whole segment of the population is being systematically shut out of buying a new car. Rather than continuing to push high-content subcompact and compact cars at Generation Y, perhaps it might be time to shift gears to something simpler and more robust, but with the “cheap chic” appeal of a brand like H&M or Zara. Perhaps a brand like Mitsubishi could reinvent itself as the “frugalista” option, and borrow some product from that other fashionably cheap brand they are now in an alliance with…