A new report from LendingTree indicates that Millennials are interested in buying cars. For a few years, it seems that this generation had less of an interest in owning cars, or even driving, than their predecessors did.
A close friend’s son is graduating from junior college this year and has been accepted into one of the more prestigious engineering schools in the area. I am very happy and excited for him. I’ll get into that in greater detail in a bit. For now, let’s focus on driving.
This recent JC graduate spent his freshman year without a car. Not only didn’t he have a car, he didn’t have a drivers license! It seemed preposterous to his dad and me; how could an 18 year old not only not have an interest in driving, but he didn’t even care to get his license? His dad and I joked with him (insert old guy voice) “…back in my day, we couldn’t wait to get out drivers license…” It’s true, when I turned 16, and could drive legally, it was one of the happiest, most exciting days of my (then) young life. But my friend’s son had no interest in driving. He and his friends would either use mass transit — yes, we do have a mass transit system in Southern California — or they would use a right sharing service, like Uber or Lyft.
At the start of his second year of college, my friend gave his son one of his old cars — my friend has six cars and trucks, all of them white, all of them at least 10 years old — but it would mean that he would have to get a license. He did, and he loves driving now. Driving and owning cars among Millennials is on the rise.
“With unemployment among millennials improving, coupled with lower interest rates and low gas prices, the share of millennial auto loan requests is on the rise,” said Doug Lebda, founder and CEO of LendingTree. “Although the share of millennial auto loan requests is relatively lower in densely populated urban areas, the auto market appears to be enticing aging millennials.”
My friend’s son’s prior lack of interest in driving was not unique among his fellow Millennials. Many believe that this generation has no interest in cars. And it’s true, the number of Millennials buying and driving cars has been far below prior generations, However, despite this widely-held belief that Millennials will become an increasingly smaller segment of the total car-buying population, the share of auto loan requests from this generation has been increasing in recent years. The share of Millennials auto loan requests has climbed from roughly 27 percent in early 2013 to about 34 percent in 2016, suggesting a return of younger buyers to the car market.
So what cars are Millennials buying? On a volume basis, the most popular cars that millennials requested a loan for were the Nissan Altima, Dodge Charger, Honda Accord, Chevrolet Impala, and Chevrolet Tahoe. Millennials opted for used vehicles at a slightly higher clip than older drivers, 46% vs. 44%. Here’s a list of the top ten
The crush of major automaker-tech firm partnerships (Toyota-Uber, GM-Lyft, Fiat-Google, Volkswagen-Gett) popping up is predicated in part on a younger generation attuned to ride-sharing and ride-hailing. There’s also been an assumption by some analysts of a topping out of U.S. auto demand this year or next due in part to millennial disinterest.
Engineering school degree
I am so excited that my friend’s son was accepted into an engineering school. Those college students who graduate with a STEM (Science Technology Engineering and Math) degree will have greater opportunities than those who graduate with degrees from many other disciplines. Over the course of a 40-year career, a professional who holds a bachelor’s degree in a STEM field will likely earn nearly $2.8 million, compared with just $1.6 million earned by those with a bachelor’s in education. That disparity starts immediately with entry level salaries that tend to be in the low to mid $30K range for educators and can exceed $60K for STEM graduates.
Of course, every individual is different, there are people with humanities degrees who succeed in life far beyond any STEM graduate, and there are those with degrees in the STEM programs who struggle to get ahead in their careers. Your own work ethic, aptitude, sphere of influence, and (let’s not kid ourselves) luck all play a part.