Millennial Car Purchases Slowed by Job, Housing Markets
SANTA MONICA, CA--Nov. 7, 2013: The youngest generation of car buyers is easing up on new car purchases in 2013, virtually erasing any momentum it gained in 2012, according to a new analysis by Edmunds.com. And the likely culprit, says Edmunds.com, is a national economic recovery that's struggled to pick up younger adults, even as older Americans have regained their footing.
"Millennials haven't seen the same benefits in the labor, housing and stock markets that Baby Boomers and others have enjoyed over the last year," says Edmunds.com Chief Economist Dr. Lacey Plache. "As a result, younger Americans across all income levels have had trouble pulling together the financial motivation to buy a new car."
In 2012, buyers between the ages of 18 and 34 bought 12.6 percent of all new cars, up from 10.8 percent in 2011. But since the end of last year, the share of new car purchases by young buyers has tumbled back toward 2011 levels (11.4 percent share in 2013, through August).
The chief factor that's keeping young buyers out of showrooms, says Dr. Plache, is employment. In 2012, the economy created an average of 30,000 new jobs each month for older Millennials (those between the ages of 25 to 34). But in 2013 (though August), there have been only an average of 4,000 new jobs created for this age group each month.
Another big factor in the decline of car sales to young buyers, explains Dr. Plache, is a slowed housing market, which has seen just 500,000 new households formed per month in the first half of 2013, compared to 1.4 million new households per month in 2012.
"Young adults living at home with parents or with roommates typically have less need for their own cars because they can share them with other members of their households," says Dr. Plache. "But young adults living on their own are more likely to need their own cars — and they're more likely to be able to afford them."
While there are many factors that are keeping young Americans away from showrooms, they don't include a declining interest in cars and driving. Earlier this year, Edmunds.com dispelled the commonly held belief that Millennials no longer care about cars, citing the popularity of luxury and sports cars among young buyers.
Dr. Plache explains all of the factors behind the slowing momentum of Millennial car buyers in Edmunds.com's Industry Center at Millennials in Reverse.