As millennials graduated high school, went to college, tried to find jobs, settled for underemployment, and eventually obtained something resembling a decent career, various media outlets discussed their coming of age with careful research and rational analysis. Just kidding! They freaked out and blamed the younger generation for killing everything, including cars and car culture. Turns out none of that was true. Millennials buy cars.
And they’ll be buying cars well into the future. The question is, what’s Gen Z gonna do?
Despite being labeled as the age cohort that would kill cars, millennials are actually responsible for keeping them alive. Basically, once younger adults obtained stable employment and started families, they shopped for cars. And they’ll keep purchasing vehicles as they get older. Millennial purchasing power will greatly impact the auto industry. In fact, their car buying appetite has the potential to keep up the industry’s recent selling rate of 16.5-17.5 million cars per year for quite some time. That’s based on simple demographics and the number of licensed drivers in America.
Millennials, generally labeled as those born between 1981 and 1996, belong to an 84 million member club. They now outnumber baby boomers. As millennials matured and started families, they obtained their driver’s license. Now, the number of license drivers is at an all-time high. In 2018, 227.5 million Americans possessed a driver’s license. That’s about 70% of the entire population. Since 2014, the percentage of Americans driving has increased too. And these trends aren’t going to slow down anytime soon:
“The key demographic group of people aged 35-44 years continues to grow until 2034 and could provide growth for the industry for the next decade,” the report said.
That last part about “young people” has some analysts worried. And it might be cause for concern. But that’s exactly the same type of talk we heard ten years ago when everyone thought millennials would shun cars. In all likelihood, Gen Z will probably follow the same trajectory as millennials and start to buy new cars when they really need them.
The biggest impediment to car ownership isn’t lack of interest. It’s debt. The cost of tuition for American students increased 25% over the last ten years. With millennials pretty much out of college, Gen Z is now the latest generation forced to grapple with the extremely high cost of education. The cost of living, at least in terms of rent, is at the highest rate it’s ever been as well. Young people won’t be able to purchase new cars if they can’t afford them.
There’s no question millennials and Gen Z will change the auto industry. They already have. But the bottom line is that car ownership will still exist well into the next decade. And the youths will sustain car culture too. They’re just not going to buy or talk about the classic cars their parents enjoyed.