In recent years, there’s been a lot of fascination with the buying habits of Millennials. They seemed to buck all the conventions of shopping that previous generations had demonstrated, making marketers across the globe scratch their heads and wonder whether this generation would ever dominate the buying segment. While Millennial sales behavior has confused economists and marketers, it turns out that the future buying landscape may look different for the Millennial generation.
Millennials didn’t create their unusual buying patterns. There were mitigating factors that stood in the way of new college graduates and young adults buying cars, homes and appliances including:
The Great Recession: Many Millennials were entering the workforce just as the Great Recession hit. Jobs were scarce as baby boomers held on to recover their losses in retirement savings, and the housing market proved impenetrable by many young adults. Millennials simply didn’t have the budget to purchase a new car.
The cost of college: Many millennials are graduating heavy in debt because of the rising cost of tuition and other associated expenses for school. When you have to pay $300 a month in college loans, and you’re working as a nanny because there are no jobs available in your field, it’s hard to put together the money to purchase a new car.
The popularity of ride services: Millennials saw the attraction of only paying for a car while using it, rather than assuming the cost of ownership. While this may not be an ideal, lifelong decision, it did help some Millennials delay the expense of a car.
It’s a Bright, Sunny Day for Millennial Sales Behavior
The numbers indicate that the Millennial generation is recovering from the recession and is entering a phase of life where car ownership makes good sense and appeals to them.
In fact, Millennial sales are quickly on the rise and are expected to be 40 percent of the market for new vehicles by 2020. According to J.D. Power & Associates, this segment of the market purchased 29 percent of all new vehicles, or approximately 4.1 million cars in the United States. They also dictate design and features with their purchasing behaviors, and are set to do so even more in the future.
While Millennials have typically purchased compact cars, they are beginning to move into crossovers and SUVs as they gain momentum in the market.
Assessing Millennial sales behaviors has been a discouraging exercise in the past for auto dealerships. Now, though, Millennials are moving to dominate the market and represent the single most important segment for car sales.