JD Power: Millennials Buying More New Vehicles Than Expected

by Cameron Aubernon

Published: May 1st, 2015

jd power millennials buying more new vehicles than expected

Millennials giving up on cars? Not according to a recent J.D. Power study.

The study found a 118 percent increase in new-vehicle purchases by the group — defined by J.D. Power as those born between 1977 and 1994 — between 2010 and 2014, Fusion reports. The jump blows away sales increases among Gen-Xers and Boomers at 57 percent and 31 percent, respectively.

Within the period, millennials bought 3.7 million new vehicles last year, compared to just 1.7 million in 2010. The increase also merits a jump in their share of overall new-vehicle purchases, coming out to 28 percent versus 24 percent for Gen-X and 37 percent for Boomers.

Despite this, the group is continually cash-strapped. Only 8 percent of sales are made with cash, according to J.D. Power. Thus, millennials are turning toward financing their new vehicles, with 40 percent accounting for all loans with terms of six years and above.

Their rides are also reflective of what’s in their wallets: millennials make up 30 percent of overall compact vehicle sales, and 25 percent of small car transactions. Average purchase price for a vehicle by a member of the group is $29,998.

Though there is a lack of data to compare millennial buying trends to those of older generations when the latter was their age, automotive analytics director Tim Dunne says the size of the millennial generation is helping to increase its share of new-vehicle sales over Gen-X, adding more members of their cohort are likely buying used over new.

[Photo credit: Daniel Oines/ Flickr/ CC BY 2.0]

#Boomers #GenX #GenerationalData #J.D.Power #Millennials #Reports #U.S.New-carSales

Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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12 of 40 comments

CaliCarGuy on May 02, 2015

I call bull on this article. The findings from this must be from people that are in their 30's I know no one in my age group thats buying a 30k car unless they are getting some serious help from their parents (which there are plenty of those) or they are already established in their 30's. From my own research with my age group buying cars, I found the average price ranged from 13-18k which sounds more realistic than JD's findings.

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- JD23 on May 02, 2015
  
  It's certainly not the norm, but I am in my early 30s and bought new cars cash when I was 22 and 28. The first car was less than $20k, but the second was over $40k. I know the job market isn't wonderful for people in their 20s and early 30s, but not everyone is struggling. I have plenty of friends who bought average to above average priced cars in their late 20s after finishing grad school.
  
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RHD on May 02, 2015

So people 20-35 buy more new cars when credit is available than 15-30 year olds do when credit is tight. How much did they charge for this incredibly profound little tidbit? Now I feel like a cheapskate... I have never paid more than 6000 for a car, at least at the outset.

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Lorenzo on May 02, 2015

What about us Boomers? We have money! We like those big Cadillacs, Buicks, and Caprices with bench front seats, that are easy to get into an out of! Oh! They don't make those anymore. I'd better hold onto my 2005 Buick LeSabre.

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- JD23 on May 02, 2015
  
  GM would be more than happy to move you into a new Escalade.
  
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- Lorenzo on May 03, 2015
  
  @JD23 I'm sure they would, but the Escalade is nothing like the easy-to-get-into-and-out-of passenger car I'd be interested in.
  
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- Ccode81 on May 04, 2015
  
  I'm late boomer or early millennials. when I was mid 20s with small budget, there were millions of nice choices of used cars of 5-10 years old at affordable prices. BMW E36, Japanese sport cars from golden ages for example. Today, 10 year old once nice cars are mostly loaded with broken outdated gadgets, ancient LCD screens, melted soft plastic interior trim. Most people will rather buy new econobox with latest smartphone linked stuff placed in the middle of console.
  
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Madanthony on May 02, 2015

Hmm, evidently I am a millennial. It seems like everyone uses a different cutoff, but under JD Power's I just make it. Using such a big age range - 17 years - makes the data pretty much useless. The buying power and preferences of a 21 year old and a 37 year old are so different that putting them in the same category proves nothing. It would be much more interesting to see this by year or by 3-5 year chunks

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- Pch101 on May 02, 2015
  
  It's reasonable to look at this way in that this is considered to be a generational group and it is valuable to marketers to measure how they behave. Where it goes wrong is when the data that comes from this is taken out of context. The doubling of purchases is not actually that big of a deal when all of the facts are taken into account; it would have been surprising if they hadn't increased that much.
  
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- Madanthony on May 03, 2015
  
  @Pch101 But it isn't valuable to marketers, because it's so broad as to be useless as a measure of how people behave. You can lump, say, boomers together, because a 55 year old and a 75 year old probably have similar preferences. A 35 year old and a 22 year old, not so much.
  
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- Lorenzo on May 04, 2015
  
  @madanthony Actually there's a much bigger gulf between a 55 and 75 year old than you imagine. You can blame a French statistician from the late 18th century for the long generations. He determined that a new majority of the population emerged every 19-1/2 years. People have been using that number for a "generation" ever since. The boomers are actually three generations in one, with the lead group being the GTO generation; the middle group the Pinto generation; and the last group the Citation generation. Pick the first year of birth of any generation, then the middle year and finally the last year, and add 18, plus or minus a couple years. That's the midpoint of each sub-group's experience.
  
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- Pch101 on May 04, 2015
  
  @madanthony The value is in tracking the behavior of a group over time. Over their life cycle, their consumption habits will change. Marketers have a lot more data than this. Just because you didn't read it in this blog article does not mean that the professionals don't have the information. It's the media and the readers who are prone to taking a single data point and misinterpreting it. The data itself is fine; it's the tendency of the amateurs and outsiders to take it out of context that is the problem.
  
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