Millennials Might Not Own Cars, But They Want To

Millennials Might Not Own Cars, But They Want To

by Precise Leads

January 12, 2017

New research shows that millennials are more interested in auto ownership than Gen X.

The recent advent of ridesharing services like Uber and Lyft has brought new questions about the purchasing preferences of millennial consumers — and the future of auto insurance at large — to the forefront of industry debate. But according to new research from Strategic Vision, millennials were found to be just as eager (if not more eager) to own cars than their parents’ generation.

That finding clashes with recent predictions that auto sales would suffer as millennials opted for ridesharing services over car ownership. These predictions, however, overrepresented data from urban residents with no practical need for cars — a welcome revelation for auto manufacturers and insurers worried about the downfall of car ownership.

A Late Start

The pessimism surrounding millennial consumers’ inclination to purchase cars can be traced back to the financial crisis of 2008, which yielded a dire millennial unemployment rate of 13%. The 2008 recession coincided with the meltdown of the auto industry in 2009, when annual car sales in the United States plunged from a pre-recession spike of 17 million vehicles to just 10 million. Young people were (understandably) in no position to purchase vehicles, setting off a frenzy of speculation that a permanent behavioral shift was underway.

What’s more, the doomsday predictions about millennial car-buying habits were driven by misleading studies, which focused primarily on cities like San Francisco and New York where many young people have no need for cars. Because millennials are an immensely diverse and geographically disparate demographic, these findings led to wildly inaccurate market predictions.

Since the recession, auto sales have rebounded, hitting a record 17.5 million in 2015. Millennial unemployment rates aligned with this auto boom, dropping from 13% to 8% in the same time frame. According to the Associated Press, the millennial share of the new car market has jumped to 28% in the past year, with millennial consumers in the California auto market outpacing boomers for the first time. Instead of preferring Uber to car ownership, millennials in 2016 (as surveyed by Strategic Vision) rated the Nissan Juke almost 50% more positively than Uber as a service. As it turns out, young consumers aren’t opting out of car ownership — they’re just getting a later startthan their Gen X predecessors.

A Brighter Future

Millennials’ consumption habits bode well for auto insurers prepared to evolve with the ever-changing marketplace. As forward-thinking automakers continue to improve in-car technology and form partnerships with ride-hailing and car-sharing services, insurers must also consider their role in the future of a changing industry.

Spendthrift millennials are likely to shop around for the best policy available before making a purchase, and for that reason, savvy carriers and agents will need to appeal to the frugality and pragmatism of the millennial consumer when looking to close a deal. New insurance industry developments like data-driven insurance technology (telematics) and usage-based insurance planswill shape pricing and consumer offerings for years to come, and agents would be wise to capitalize on these technological advancements.

source:go.preciseleads.com

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