How Millennials Are Disrupting the Auto Industry

A lot of debate has taken place surrounding millennials and their car buying habits. Are they cautious about purchasing vehicles? Are they causing sales to rise or decline? Current data shows that millennials are in fact disrupting the auto industry. However, they seem to be disrupting it in a positive way.

Previous Misconceptions

After the recession, many doubted the car-buying power of the newer generations. Most assumed that it would create a barrier between millennials and the industry with such turmoil in the job market and credit limitations of young people. Although it’s true that the recession halted sales among millennials, as well as all generations, their comeback seems to be strong.

A Powerful Force

Millennials, also known as generation Y, are the fastest growing target market in America’s auto market. In fact, they are growing so quickly that they will represent 40% of the entire auto market by 2020. With a rise in ride-sharing, urban living, and school debts, it seems safe to assume that numbers would not hold out strong compared to previous generations. Still, a surprising 4.1 million vehicles last year were purchased by the millennial group in the US.

Needs vs. Wants

More young people are becoming conscious about their lives and expenses. With millennials learning to live within their means, their focus has shifted to buying vehicles with economy and practicality. While there are always those few that rush to buy feature-loaded cars for the pure thrill, most millennials realize the importance of saving money, especially with their jobs, debts, and responsibilities. They’re focusing more on cheap car insurance quotes, rentals, and loans instead of the sleekest vehicle in the lot.

For this reason, 18% more millennials purchase entry compact cars compared to the overall population. Mid-sized SUVs and crossovers have become a staple too, since they carry convenience and the many cargo needs of young students and travelers.

Preferences

Despite the strong emphasis on function over sheer looks and features, many millennials still hold true to individual preferences. Requests for custom vehicle options have skyrocketed within the industry, with more young consumers relying on their own individual style and the need to stand out. Feature wise, they’re looking for vehicles with back up cameras, collision deterrents, and satellite radio. These trends have alerted auto giants, who have responded by gearing ads and presentations on social media websites like Twitter and Instagram to attract potential buyers.

Experience

Unlike previous generations, Y has turned car buying into a social experience. People don’t want to miss out on the experience of flying down the highway in a new vehicle or filling a social feed with photos of their new ride. Just because millennials seem more conscious about functionality doesn’t mean the superficial aspect of owning a car doesn’t exist, and social media plays a huge role in that.

Millennials also simply love to drive more, 18% more than generation X and 72% more than baby boomers. 88% of them don’t trust other motorists, which explains why they value safety and economy at younger age frames.

Ride Sharing & the Future

These young figures haven’t only been the focus of the purchasing component of the industry, as many millennials are now working as part of it as well. Of generation Y, one in six plan to use a vehicle to drive for Uber, Lyft, or a similar service. This stems from a want to be on the road mixed with a need to help supplement their income under strong college debt and urban living costs.

The strongest characteristic of this generation is that they are one of change. Millennials are keen on adapting to technology and becoming one with the digital age. For this reason, their continued preferences and buying trends may not be the same tomorrow as yesterday.

In all, debates will continue to take place on how millennials change the industry. While many acknowledge generation Y’s uncertainty, others are confident they are a smart and strong market segment. Their disruption of the industry seems to be positive overall.