Millennials will soon be the largest buying group in the U.S.Once written off as an anti-car generation, millennials, categorized as those born between the early 1980s and late 1990s, are now proving to be a powerful force in the new car market.In 2011, millennials represented just 20 percent of new car buyers. Fast-forward to current day and millennials now account for 29 percent of all new car purchases, trailing only the baby boomers' 36 percent share of the market. By 2020 analysts believe millennials, now the fastest growing segment of buyers, will represent 40 percent of the new car market.
That's good news for automakers as millennials were all but written off a few years ago. Millennials were the hardest hit by the 2008 financial collapse, forcing a large chunk of its buyers out of the market. However, an improved economy has seen the segment come back strong.
"The millennial was the buyer that was first pushed out of the market with the recession," Jeff Schuster, senior vice president of forecasting with LMC Automotive, told Automotive News. "They were late coming back, but they have come back. We are past that issue."
However, millennials are shopping much differently than their baby boomer counterparts. A recent study by Autotrader found that millennials are buying vehicles out of necessity rather than out of desire, resulting in lower transaction prices for the group. Another deviation is that millennials often measure value by a car's monthly payments rather than its total cost.
"The millennial is not worried about "If I spread it across 84 months, it could cost me a lot more interest,'" Schuster said. Millennials also crave the latest high-tech toys.
That could make marketing to millennials a bit tricky for the world's automakers, but it's far better than the future once painted of millennials abandoning vehicle ownership in favor of services like Uber. "I think in respect to the interest level, the need for transportation is similar to what it has been in similar generations," said Thomas King, vice president of PIN operations at J.D. Power.