Car Buying

Turns Out Millennials Are Buying Cars After All

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author photo by Russ Heaps May 2016

According to conventional wisdom, millennials are not only lagging behind previous generations in driving and buying cars -- they're also less likely even to obtain driver's licenses. Reasons offered for this phenomenon have included the new generation's environmental consciousness, the proliferation of personal connectivity devices and the desire to spend money on things other than gas, cars and insurance.

This may not be the case, however, if a recent study by the online loan marketplace LendingTree reflects the broader car-buying arena. LendingTree's finding: Across the country, notably larger numbers of younger car buyers are applying for auto loans.

Sampling

To reach its conclusion, LendingTree analyzed its car-loan requests for the 12-month period from May 15, 2015, to May 15, 2016. It looked specifically at inquiries from 18- to 34-year-olds, measuring them against requests from the total population.

LendingTree also separated millennials according to where they live in order to rank interest city by city.

Numbers

What LendingTree found flies in the face of the notion that millennials simply can't be bothered to buy cars. In the most recent year studied, the percentage of loan requests from 18- to 34-year-olds jumped from about 32 percent to 34 percent of all car-loan requests.

To put this in perspective, in 2013, only about 27 percent of auto-loan inquiries were from millennials.

Dealership software provider Dealertrack found something similar. "Based on April year-to-date data, the percentage of share of credit apps coming from millennials versus the other age groups has increased to 37 percent for April. In fact, 35 percent of all new auto loans in 2015 went to millennials," Jason Barrie, the firm's vice president of market performance and F&I solutions, commented.

Other data that supports the LendingTree study includes a recent Gen Z study from Autotrader and Kelley Blue Book (KBB). Our research found that 82 percent of millennials have their driver's license, and 68 percent said they got their license as soon as they were old enough. Among those millennials who have a license, 78 percent personally own or a lease a car.

City by City

Why millennials are more inclined to shop for a car and a car loan in one city over another isn't crystal clear. However, many of the cities toward the bottom of LendingTree's list are larger and have more accessible mass transportation.

The top five cities with the highest percentage of car-loan requests from millennials were:

  • Memphis, Tennessee (42 percent).
  • Milwaukee, Wisconsin (41 percent).
  • St. Louis, Missouri (38 percent).
  • Minneapolis-St. Paul, Minnesota (36 percent).
  • Houston, Texas (36 percent).

Meanwhile, the five cities where the lowest percentage of car-loan requests came from millennials were:

  • Hartford, Connecticut (23 percent).
  • Las Vegas, Nevada (26 percent).
  • Sacramento, California (27 percent).
  • Providence, Rhode Island (27 percent).
  • Phoenix, Arizona (27 percent).

Model by Model

According to the LendingTree study, there isn't a huge difference in the buying habits of those under 35 in comparison with shoppers aged 35 and older, at least in terms of used versus new cars. Among millennials, about 54 percent of requests involved new cars, as compared to 56 percent for buyers 35 and over. A 2 percent difference isn't a colossal gap.

So what are those millennials buying? Somewhat surprising is that six of the top 10 models bought by the under-35 group are produced by domestic automakers: GM, Ford and Chrysler.

The top five cars purchased by millennials were:

What It Means

The LendingTree, Dealertrack and Autotrader-KBB studies all seem to support the same conclusion: The millennial generation's interest in car ownership isn't as stunted as many believe. It may be high time for automakers to start putting this target audience front of mind.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Turns Out Millennials Are Buying Cars After All - Autotrader