Millennials are an important segment for automakers who continuously seek younger customer base. But despite their goals, millennials remain a tough target because they differ significantly from previous generations. For them, cars are not as important as they used to be for their parents. Generation X considers the vehicle ownership the first sign of freedom. Moreover, for them, the car is a status symbol. The better and pricier it is, the higher the reputation of its owner. Unfortunately for automakers, this is no longer the case for millennials.
Until a year ago, the auto industry feared that Millenials would opt for car renting services rather than owning a car like their parents.
Today, however, Generation Y’s willingness to own a car seems to be increasing. We previously thought car ownership was unaffordable for millennials, but this is no longer such a worry either.
Lending Tree, an online lending exchange platform, published data that showed Millennials had increased their loan requests, reaching a share of 34% of all credit applications in 2016. For comparison, this share was only 27% in 2013. Experts relate this to the decrease in unemployment and lower interest rates.
Still, Millennials do not throw themselves at car ownership with enthusiasm. They are more careful and thoughtful before committing. Unlike older drivers, they are not so interested in large SUVs. Instead, they prefer midsize sedans and muscle cars. Experts say this is also related to the sales incentives automakers have for such cars, as well as the fact that they do not require as much spending on fuel.
Millennials opt for style that fits their pocket, too. Also, more and more Millennials pay attention to technology features when choosing a vehicle, especially to infotainment and connectivity.
Acura by Honda
The most popular luxury car among Millennials is the Acura. The brand is celebrating its 30th birthday this year, which called for a special ad reminding that age is just a number. The ad emphasized that Acura’s ILX sedan is the most popular luxury sub-compact among Millennials. Surprisingly or not, it surpassed cars like Audi A3, Mercedes-Benz CLA, and BMW i3.
Not many Millennials choose a luxury car, however. The generation prefers smaller, compact vehicles, with eco-friendly features. Most often they would prefer reliability over image and convenience over luxury.
Subaru WRX, Mitsubishi and Mazda
The model with the highest mix of millennial buyers overall is the Subaru WRX. Slightly more than 1 in 4 of its owners is between the ages of 18 and 34. The brand’s increasing popularity across the industry is also a factor for Millennials. Let’s not forget that they are the age group that relies most on ratings, opinions, and reviews.
A surprise in the list is Mitsubishi. Younger buyers account for 15.3 percent of Mitsubishi’s sales. With a close share of sales, 15.2%, Mazda is also gaining a spot in the hearts of Millennials.
The ultimate favorite among the bigger brands in the US is Dodge. In 2015, Millennials constituted 15.8% of the brand’s sales. Despite the death of the Dart, which was the brand’s compact eco-friendly model, the Dodge is still a rock among Millennials with its other models. The Dodge Charger, for example, has made a few pop culture appearances recently, including serving as Uber’s “storm trooper” cars in a promotion for “Star Wars: The Force Awakens” in September.
Luckily for Automakers and contrary to all the expectations, Millennials are willing to spend on cars. A survey by eBay Motors showed that Millennials are the age group that is most likely to spend their tax refunds on automobile accessories and parts. Unlike with many other products, Millennials remain loyal to the cars they choose. In another survey from 2015, Dodge and the Subaru WRX were again among the Top 3 preferred brands for Millennials.
Generation Y chooses carefully and wisely, not driven by strong emotion. Yet, many Millennials have given names to their cars. The next time you hear someone yell at Red or Betsy, look around, it might be a 20-some-year-old, engaged in a friendly talk with their Honda.
The information in the article is based on studies by Lending Tree, IHS Automotive and Ebay Motors, published in 2016.