Millennials top Gen X in new-car buying for first time
Millennials surpassed Gen X in new-car purchases for the first time, signaling a growing transition in consumer preferences of affordability and sustainability over utility.
For the first half of 2014, consumers born between 1977 and 1994 accounted for 26 percent of new-vehicle sales, while those born between 1965 and 1976 accounted for 24 percent, J.D. Power and Associates said in a report released Thursday.
Baby boomers, born between 1946 and 1964, kept their spot as the largest consumer group, buying 38 percent of new vehicles sold in the same time frame.
J.D. Power estimates millennial sales volume to increase 17 percent by the end of the year and Gen X sales volume to grow just 6 percent.
In 2013, Gen X accounted for slightly more new-car purchases than millennials did, at 24 percent vs. 23 percent. Boomers made up 40 percent of new-car consumers last year.
The 2014 survey found that younger buyers preferred smaller cars, with 20 percent of vehicles sold to millennials falling under the compact car segment. Compact SUVs were the most popular for Gen X, accounting for 15 percent of the age group’s sales.
While baby boomers are the largest group of consumers, the number of millennial buyers will only increase -- accounting firm Deloitte predicted in its 2014 Global Automotive Consumer Study that Gen Y will account for 40 percent of new-car purchases by 2020.
With consumer demographics changing, automakers must adapt to evolving generational values and transportation needs.
“As new-vehicle demand among Gen Y consumers increases, it will be important for automakers to respond to the needs of these consumers, not only in terms of the vehicle design, but also the marketing, sales and service experience,” Thomas King, vice president of J.D. Power’s Power Information Network, said in the press release.
For manufacturers, this means catering to a generation that highly values cost-effectiveness and convenience, according to Deloitte’s study.
Sixty-seven percent of millennials surveyed by the accounting firm said most of their needs were met by public transit, and though 64 percent said they “loved” their cars, millennials were found to be three times more likely than the other two generations to abandon their vehicles if costs of upkeep increased.
Millenials also are more willing to embrace new-vehicle technologies. A majority of millennial consumers surveyed -- 65 percent -- said they would pay more for an alternative powertrain, and the consumer group was 16 percent more comfortable with the idea of self-driving vehicles than the other two generations.
In sales and service, convenience is key for younger buyers. More than half would prefer to purchase a vehicle without negotiating, and 44 percent would pay for a dealer to pick up their car for repairs and drop off a loaner.