During the past decade, the rise in car-sharing services, urban living and college debt payments led to doubts about millennials' desire to ever own a vehicle.
Not anymore. Millennials make up the fastest growing segment among vehicle buyers and likely will represent about 40 percent of the U.S. new-vehicle market by 2020.
Last year, millennials -- also known as Generation Y -- purchased 4.1 million vehicles in the United States, accounting for 29 percent of the market, according to data from J.D Power and Associates' Power Information Network. They now drive changes in automotive marketing and product features and are likely to influence future automotive developments more than any generation before them, experts say.
Because of the Great Recession, millennials entered the market later than prior generations. As the U.S. economy hit the depths in 2008-09, millennials were having a difficult time finding jobs, and the cost of insurance was rising rapidly, said Mustafa Mohatarem, chief economist for General Motors.
But as the economy improved, millennials started buying cars, Mohatarem said: "What we see is the share of new vehicles being bought [by millennials] is increasing significantly."
Jeff Schuster, senior vice president of forecasting with LMC Automotive in Troy, Mich., says millennials have shaken off the effects of the recession.
"The millennial was the buyer that was first pushed out of the market with the recession," Schuster said. "They were late coming back, but they have come back. We are past that issue."
New-vehicle purchases by millennials -- the 75 million-plus group born in the United States between the early 1980s and late '90s -- are likely to grow at a faster rate than any other age group in the coming years. Since 2011, their share of U.S. retail new-vehicle sales rose nearly 9 percentage points, compared with baby boomers, whose share declined 6 percentage points during the same period, according to J.D Power.
"If you combine Gen Z and Gen Y, they are 30 percent now, a massive increase from just 20 percent in 2011," said Thomas King, vice president of PIN operations at J.D. Power. Gen Z is the post-millennial age group.