Millennials Now Positioned to Save U.S. Auto Market?

Matt Posky
by Matt Posky
millennials now positioned to save u s auto market

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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2 of 27 comments
  • DenverMike DenverMike on Jan 14, 2020

    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.

  • Superdessucke Superdessucke on Jan 15, 2020

    '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!

  • Rng65694730 All auto makers seem to be having problems ! Still supply chain issues !
  • MrIcky I'd go 2500 before I went 1500 with a 6.2. I watched an engineer interview on the 2.7l. I appreciate that their focus on the 2.7 was to make it perform like a diesel and all of their choices including being a relatively large i4 instead of an i6 were all based around it feeling diesel like in it's torque delivery. It's all marketing at the end of the day, but I appreciated hearing the rationale. Personally I wouldnt want to tow much more than 7-8k lbs with a light truck anyway so it seems to fit the 1500 application.
  • MaintenanceCosts If I didn't have to listen to it, I'd take the 2.7 over the 5.3 based both on low-end torque and reliability record (although it's still early). But the 5.3 does sound a lot nicer.
  • Arthur Dailey The Torino Bird which was relatively short lived (3 years), 'feasted' on the prestige originally associated with the T-Bird name. The Cordoba originally did the same as it had a Chrysler nameplate. The Torino 'Bird had modified 'opera' style middle windows, a large hood with a big chrome grill and hood ornament, pop-up headlights, and a 'plush' interior. It was for the time considered a 'good looking' car and could be ordered with a 400 cid engine (the first 2 years) and even a T-bar roof. You can see one just behind De Niro and Liotta in Goodfellas when they are standing in the diner's parking lot and have learned that Pesci has been 'whacked'.Although a basically a renaming/redesign of the (Gran Torino) Elite, the Elite was for a time available with Ford's 460 cid engine.I had both an Elite and a 'Torino Bird'. Although their wheelbases were the same, the 'Bird always seemed 'bigger' both inside and out. The Elite seemed 'faster' but it had the 460 opposed to the 400 in the 'Bird. But those are just subjective judgements/memories on my part. However the 'box Bird' which followed it was a dud. It sold Ok the first year based on the T-Bird name, (probably mostly leases) but it quickly lost any appeal/prestige. Back then, the management/executives of the Toronto Maple Leafs used to get leased T-Birds every year. After the first year of the 'box Bird' they changed to different vehicles.
  • Parkave231 Random question that -- in the interest of full disclosure -- I am too lazy to look up on my own.Back in the day, cars in my mostly-GM family had a hard lock on the steering wheel, such that unless the key was turned to the ACC position, the steering wheel was physically locked in place.I don't recall whether my 2002 Deville locked the wheel in place, but I want to say it didn't, even though it still had a physical key.And now, of course, most everything is push-button, and my current Cadillac doesn't physically lock the wheel.So was the movement away from a literal physical lock of the steering wheel back in the 80s driven solely by the transition to push-button start, or was there some other safety regulation that got rid of them, or just something else that a car manufacturer could omit for cost savings by running something else through software (I'm guessing this since the H/K issue is a thing).