By on January 14, 2020

With nearly a decade’s worth of articles suggesting millennials never liked cars and are an industry boat anchor in waiting, a new report claims they may actually be the group that saves it. Using the same data from the Department of Transportation/Federal Highway Administration that showed present-day teens holding off on getting their driver’s license, the report placed Bloomberg under the impression that millennials will pick up the slack once they start cranking out offspring.

Millennials never actually hated cars. They’ve simply been, on average, too poor harness the same purchasing power of their ancestors, forcing them to put off major life decisions like getting married, having kids, buying a home and/or purchasing a new automobile. While some assuredly prefer public transit for environmental or social reasons, plenty of this has nothing to do with personal preference. The good news is that this fact appears to be reflected in the number of licensed drivers among their ranks, now that they’re getting a little older. 

Analysts at Benchmark Co, a financial research firm, says millennials are getting licensed at the highest rate in 40 years and are on the cusp of outpacing their boomer parents.

“The impact on the auto sector from the millennial generation could be as great as the impression the baby boomers had on the industry in the 1980s,” Mike Ward, Benchmark’s auto analyst, explained in the report. “Over the last five years, there were 15.4 million new drivers in the US, the biggest comparable increase since the 1974-78 period.”

From Bloomberg:

The first millennials reached 35 in 2016, toward the beginning of the auto industry’s record five consecutive years of at least 17 million U.S. vehicle sales. Traditionally, license rates begin to peak when people reach their mid-30s and millennials are no different. They are having babies, buying SUVs and moving to the suburbs.

“We believe underlying demographics support normal demand of 16.5-17 million units annually over the next 5-10 years,” Ward wrote.

Licensed drivers will grow by 12.5 million people in the U.S. over the next five years, Benchmark forecast. By 2025, there will likely be a record 245 million licensed drivers in the U.S. That could result in an extra 3 million vehicle sales a year.

“The key demographic group of people aged 35-44 years continues to grow until 2034 and could provide growth for the industry for the next decade,” the report said.

This may also be welcome news for the demographic cohort succeeding the millennials, Generation Z. They’ve also been putting of major life events. While some of that comes down to the same economic factors (lower pay, higher college debt, etc.) impacting those born a generation later, we’ve also seen the same kind of reporting accusing Gen Z of simply snubbing automobiles and houses. Reasons provided range from environmental concerns to young people simply having a penchant for Uber and apartments.

Regardless, this offers hope to youngsters cursing their own financial situations and desperate to buy a sparkly new automobile — provided they’re patient enough to wait. But it doesn’t create any incentive for automakers to cater to those under the age of 35, which is cause for worry. Some of North America’s most affordable models have already vanished from the market as domestic manufacturers prioritize vehicles with broader profit margins (trucks, SUVs, and crossovers).

What will happen if an automaker falls under the assumption that it’s pointless to even bother trying to court twentysomethings with new product?

 

[Image: Monkey Business Images/Shutterstock]

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27 Comments on “Millennials Now Positioned to Save U.S. Auto Market?...”


  • avatar
    jack4x

    “What will happen if an automaker falls under the assumption that it’s pointless to even bother trying to court twenty somethings with new product?”

    Then the broader market of young people will all turn into Jalopnik writers nostalgically reminiscing about how there’s nothing good anymore and cars peaked in the 80s-90s (before many of them were born).

    • 0 avatar
      Lou_BC

      “cars peaked in the 80s-90s”

      If millennial’s believe that then the planet is truly doomed… LOL

      • 0 avatar
        Lorenzo

        There’s room for argument on that, depending on your definition of “peak”. Some could make an argument that exterior design peaked in the late ’50s to early ’70s, and the mechanicals peaked in the ’80s-’90s, before the electronics and drive by wire took over. Then again, you could argue the popularity of cars, as opposed to trucks and SUVs, peaked in the ’80s-’90s. There are a lot of ways to interpret that statement.

    • 0 avatar
      Lorenzo

      Never forget the old truism: you can’t sell an old man’s car to a young man, but you CAN sell a a young man’s car to an older man. That means there will always be styling that appeals to the younger set, as long as their are options to accommodate the older demographic. What auto companies need to remember is that the marketing must be to the young, but the profit is in selling up to the older, more prosperous customer.

  • avatar
    SlowMyke

    So it WAS those goddamn boomers the whole time? Man, the plot twists…

    Also, file this under crap we already know. The whole cycle of “this new generation doesn’t want to grow up, they’re ruining everything!” and “hey look, they finally grew up!” is pretty simple.

    • 0 avatar
      highdesertcat

      “So it WAS those goddamn boomers the whole time?”

      Yes, it was. The boomers shaped the automotive world according to their vision of their future and now the Millennials will have to do the same for their future.

      • 0 avatar
        Lou_BC

        “Boomers” shaped the world to their own selfish proclivities. “Boomers” who still run everything wonder why the younger generations aren’t into what they are into. They blame that generation gap on the next generation.

        Millennial’s and other younger generations just like a huge swath of the middle class have been screwed over by corporate/elitist greed. You aren’t going to buy a car if you can’t afford one or are still paying off student loans.

        • 0 avatar
          Lorenzo

          Balderdash. Boomers just hit the sweet spot of greatest national wealth after WW2, when the American industrial machine dominated the world.

          Their parents, the “greatest” generation, grew up in the depression era and took even longer to get licenses. Boomers’ grandparents were raised in the roaring 20s, in somewhat similar circumstances to boomers after WW1.

          Most states didn’t even issue licenses, or they weren’t mandatory, until the early 1930s. There was carnage on the roads by the late 1920s, and police argued they couldn’t enforce minimum age and knowledge of the road laws without licensing.

          The generation after the boomers, Generation Roman Numeral Ten, saw the slow unraveling of postwar prosperity and the rise of inflation after the dollar was unhitched from the gold standard in 1971.

          In short, each generation is a product of national circumstances during their formative years. The only constant is the conspiracy theories that this generation or other got the short end of the stick.

          • 0 avatar
            HotPotato

            There’s no nonsense more nonsensical than gold-standard nonsense. But it is an excellent target ID tool for salesman hawking Krugerrands, Bitcoin seminars, back-yard bomb shelters, and Rand Paul newsletter subscriptions.

  • avatar
    28-Cars-Later

    “What will happen if an automaker falls under the assumption that it’s pointless to even bother trying to court twentysomethings with new product?”

    I think that’s already happened and the reason is very simple: twentysomethings cannot afford what they are dealing as a group.

    • 0 avatar
      highdesertcat

      ” twentysomethings cannot afford what they are dealing as a group.”

      Some CAN afford it but choose not to buy what the OEMs are offering.

      The auto industry needs to look at the wants and needs of the young people in Europe, in Japan, in South Korea, in China and South Asia. That is where the next big boom will be.

      • 0 avatar

        I see rather bust than boom in these areas, Japan and Europe are essentially dying societies. Japan has really serious demographic problem. Japanese car market can be safely ignored. China is still dynamic country but sooner than later will have the same problems. No one really cares about Korea.

        • 0 avatar
          JD-Shifty

          you sound like an old ignorant person who lives in the midwest and watches FOX. Even if Japan loses half its population it will still be a very densely populated island. Overpopulation on this planet is a real prob
          lem,

  • avatar
    TMA1

    Betteridge’s law of headlines: “Any headline that ends in a question mark can be answered by the word ‘no\'”.

  • avatar
    Comp1

    Funny how things work out. You just can’t get groceries, two kids and the dog on an electric scooter afterall!

  • avatar
    sgeffe

    My “anti-Milennial” boss and his wife (33 and 32) are doing their part. With three kids and a nice house, they’ve both leased new vehicles within the past eighteen months, she a 2019 Traverse last year, and he a reasonably well-equipped 2019 Silverado just before Christmas.

  • avatar
    dal20402

    The boomers pretty much destroyed millennial discretionary spending by cleverly extracting all of millienials’ money through education (largely to pay entrenched boomer professors and administrators); health care (largely to pay boomer senior doctors); and housing (largely to pay off boomers who bought land dirt-cheap and now want a handsome profit).

    I’m Gen X, but I went to professional school late so my life has been along the timeframe of the more senior millennials. I’m almost done paying back the $150k the boomer professors lent me for law school, but I’ll be paying back the $700k+ I paid a couple boomers for their unrenovated house for many years yet.

    • 0 avatar
      Superdessucke

      I predict housing will prove to be the big Boomer scam. They bought houses under the model that they’d increase in value and serve as their best egg. You handed over a big egg it seems :-(

      But single family homes, in most places, even affluent areas, are no longer increasing in value ahead of inflation. In fact they seem to be decreasing, In big cities, Millennials are shunning suburbs and making a beeline towards multi-unit properties. Maybe that’ll shift with this new car buying thing but for now, single families do not seem to be the attractive option they once were.

      • 0 avatar
        Dan

        “In big cities, Millennials are shunning suburbs and making a beeline towards multi-unit properties.”

        Give them another ten years to trade in their designer small breed dogs for strollers and they’ll leave the city for a less vibrant school district just like those before them did.

      • 0 avatar
        dal20402

        Since I paid those boomers in 2016, my house has appreciated by about 20%. But I’m fully aware that my market isn’t representative of anything but big coastal cities.

  • avatar
    DenverMike

    Scoring that sparkly new auto doesn’t have the romance it once did. Nor does going into debt.

    It’s not that new cars suck completely, but industry analysts always tell automakers exactly what they want to hear.

    And neither wants to talk about the pink elephant in the room, at least not publicly.

    I’m watching millennials scoop up the muscle cars Boomers once polished/hoarded. Also they’re buying up Fox Mustangs, going back to four eyed 5.0s, Camaros, 80’s/90’s Japanese sports/sporty cars, jacked up Jeeps, lifted trucks, early 3-series, restomods, all sorts.

    Yep the aftermarket auto parts sector is exploding tremendously, and some would rather not leak the news, for copycats and whatnot.

    TTAC staff won’t touch the subject for fear of getting blacklisted from automaker press junkets/perks.

    But yet TTAC has no problem snuggling up to aftermarket vendors on these pages.

  • avatar
    Superdessucke

    ‘What will happen if an automaker falls under the assumption that it’s pointless to even bother trying to court twentysomethings with new product?”

    We will find out because that is exactly what GM, FCA, and Ford have done. Hopefully, these rising star Millennials like big bawdy gas-guzzling pickups and SUVs and podlike CUVs! That would be good news for the Big Three and America, and bad news for Bernie and the Squad. Stay tuned!

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