The global automotive industry is currently facing serious economic headwinds and declining sales, leaving industry players wondering if millennials – who currently make up one-third of the world’s population – will drive the industry forward or break from past generations on car ownership. A report released recently by Duff & Phelps suggests that concerns that millennials are less interested in car ownership are greatly overstated and rooted in misconceptions about millennial car-buying patterns.
The Millennials and Auto Trends Report finds that approximately 75% of global respondents expect to purchase or lease a new car in the next five years
Millennials, including city dwellers with a myriad of transportation options, highly value having their own car for the independence and convenience
Gas or diesel engines are the globally preferred powertrain of choice (54%), but market share of hybrid and electric vehicles poised to increase
For the report, Duff & Phelps surveyed 2,150 millennials from across the world on car-buying preferences and the factors driving these trends. The report found that the overwhelming majority of millennials (75%) expect to purchase or lease a car within the next five years, indicating that millennials may be responsible for turning around the struggling automotive industry in the coming years. The findings also suggest that factors including environmental concerns, city-dwelling and availability of public transportation and ride-hailing services have not dampened millennial interest in car ownership.
Seventy-five percent of global respondents indicated that they currently own or lease a car and 83% of that group expect to purchase or lease another car in the next five years. More than half (55%) of respondents who do not currently own a car expect to acquire one in the next five years. When extrapolated to the full millennial population, this indicates the potential for a substantial uptick in car purchases in the coming years.
Surprisingly, city dwellers’ preferred method of transportation is driving their own car, despite the myriad of public transportation, ride-hailing, biking and walking options. Eighty percent of global city dwellers said that they plan to buy or lease a car in the next five years, while 88% of the city-dwelling respondents who already have a car expect to purchase or lease another one in the next five years.
Despite the common perception of millennials as an environmentally conscious generation, the majority of millennials across the globe (85%) indicated that having a car is a necessity for independence and convenience, and generally preferable to other, more environmentally-conscious options like ride-sharing or public transportation. Additionally, millennials identified price as one of the biggest factors in a car-buying decision over factors like environmental impact, aligning with the preference of 54% of respondents for traditional gas and diesel engines.
Though most are currently considering expense and convenience over environmental concerns, the findings do indicate that millennials could create a significant market share growth opportunity in the coming years for hybrids or all-electric vehicles (EVs), which have a combined global market share of just 4.7%, according to LMC Locomotive. Thirty-six percent of respondents said they find these cars the most appealing, compared to gas or diesel.
Mark Kwilosz, head of the North American automotive industry practice at Duff & Phelps, said, “Our Millennials and Auto Trends Report challenges conventional wisdom that millennials prefer alternatives to car ownership and provides encouraging evidence that millennials will drive the automotive industry forward. However, it is in the hands of automakers to take notice of what millennials are looking for in their vehicles and to continue making the right technological investments to satisfy millennial preferences.”