Apparently Millennials Didn’t Kill Car Sales After All
It has become something of a ridiculous trope among some news outlets to claim that millennials are “killing” something or other because they do things slightly differently from their parents did, leading to much shaking of heads and lamenting of kids these days.
In the car world, this took the form of “Millennials are killing new car sales!” as they showed lower rates of vehicle purchases and higher use of new ride-sharing apps like Uber and Lyft. However, in a new study by TransUnion, it seems that they were just waiting a little bit to buy, as consumers now aged 21 to 34 are taking out car loans at a rate 21% higher than Generation X did at that age (this data compared 2015 data to 2001 data, defining Gen X as people born 1965-79 and Millennials as born 1980-94).
TransUnion’s Senior Vice President of Global Research and Consulting Ezra Becker offered a few reasons for this shift.
First, she said, loan terms are lengthening—when Generation X was in their 20s and 30s, the maximum loan lengths were typically 5 years, but now loans can stretch as long as 7 years, lowering monthly payments (although increasing the amount of money the lender makes on the loan). Also, interest rates are lower now than Gen X enjoyed at a comparable age.
Also, Millennials make use of more advanced technology, expanding the originally local market of a car dealership onto the Internet, letting them easily explore not just their local dealership’s inventory but also the inventories of any dealership across the nation.