Young adults sheepish on buying cars, drivingDate posted: 11/5/14 01:15:00 AM
The millennial generation is a crucial demographic for auto manufacturers, according to a recent study from Deloitte. And though many young adults are still struggling to find their financial footing in wake of the Great Recession, at 80 million strong in the U.S., millennials represent the largest consumer segment since the baby boomers.
In fact, millennials should make up 27 percent of the nation's population by 2015 and account for 40 percent of all car purchases by 2020, according to Deloitte.
Joe Vitale, a global automotive industry leader with Deloitte, said that auto manufacturers must cater to the wants and needs of the current crop of young adults. Since 2009, some of the most sought-after features that millennials want in a vehicle include safety rating, overall value and cockpit technology.
"Auto manufacturers have an opportunity to develop innovative and low-cost personalization options for this powerful consumer segment," Vitale said.
Shopping criteria also ranked high with millennials, meaning they want a certain level of engagement from salespeople.
"[Millennials are] looking for experts to help answer their questions, and to touch and test out the physical car before making a purchase," said Isabelle Helms, senior director of research and marketing analysis at AutoTrader.com. "That said, millennials want time and space to make the right decision, and will value the salespeople who provide the information they seek in a no-pressure way."
The cost of cars
According to Masa Hasegawa, a principal at Deloitte, nearly 75 percent of respondents said they want technology that can identify other cars on the road, while 63 percent want applications that inform them when they have surpassed the speed limit.
But it's cost that seems to be the biggest car-buying obstacle for most of America's young adults, according to Hasegawa. Four of five people surveyed said they aren't buying cars because they can't afford one. Seventy-five percent added that they can't afford fuel or maintaining a vehicle, while 67 percent are OK with walking or using public transportation.
Teenagers not as interested in driving
But it seems that avoiding a car purchase - or even interest in driving - is happening at a young age. According to a study from AAA Foundation for Traffic Safety, only 44 percent of teens obtained a driver's license within the first year of becoming eligible from 2007 to 2011. During that span, only 54 percent are issued a license before turning 18.
Thus it's much less of a surprise that cars purchased by people aged 18 to 34 plummeted 30 percent from 2007 to 2011. Additionally, 39 percent of teens told AAA they would be fine without driving, while 36 percent said gas and driving was too expensive. Another 35 percent of respondents also said they "just didn't get around to it."
"For most, it's about not having a car or having alternatives for getting around that are the top reasons cited for delaying what has traditionally been considered to be a rite of passage," said Peter Kissinger, president and CEO of the AAA Foundation for Traffic Safety.
But income also played a major factor for teenagers getting their license. Low-income and minority teens are the least likely to acquire a license before the age of 18, as only 25 percent of teens living in households with incomes less than $20,000 earned their license before they turned 18.
Meanwhile, nearly four of five teens hailing from households with incomes of $100,000 or more were issued a license before they turned 18.
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