No, Millennials Aren’t Buying More Cars Than Gen X

Millennials are far less likely to have bought cars over ?. Graph: City Observatory
Millennials are far less likely to have bought cars over the last year than their Gen X counterparts. Graph: City Observatory

Cross-posted from City Observatory

Will somebody teach the Atlantic and Bloomberg how to do long division?

Today, we take down more breathless contrarian reporting about how Millennials are just as suburban and car-obsessed as previous generations. Following several stories drawing questionable inferences from flawed migration data claiming that Millennials are disproportionately choosing the suburbs (they’re not) come two articles in quick succession from Bloomberg and the Atlantic, purporting to show the Millennials’ newfound love of automobiles.

Bloomberg wrote, “Millennials Embrace Cars, Defying Predictions of Sales Implosion.” Hot on its heels came a piece from Derek Thompson at the Atlantic (alternately titled “The Great Millennial Car Comeback” and “Millennials not so cheap after all”) recanting an earlier column that predicted Millennials would be less likely than previous generations to own cars.

The Atlantic and Bloomberg stories are both based on new estimates of auto sales produced by JD Power and Associates. The data for this report were not available on the JD Power website. However, JD Power released a press release making broadly similar claims last summer; we relied on that to better understand their methodology and definitions. (We’ll post a link to the new JD Power report as soon as it becomes available).

The headline finding is that Millennials (the so-called Gen Y) bought about 3.7 million cars, while their older Gen X peers bought only 3.3 million. (We extracted these numbers from the charts in the Atlantic story). Superficially, that seems to be evidence that Millennials are in fact buying more cars.

But there’s a huge problem with this interpretation: There are way, way more people in “Gen Y” than there are in “Gen X.” Part of the reason is that the Gen Y group — also often called the “echo boom” — were born in years when far more children were born in the U.S. The bigger, and less obvious problem is the arbitrary and varying periods used to define “generations.” According to the definitions used by JD Power, Gen Y includes people born from 1977 to 1994 (a 17-year cohort), while Gen X includes those born between 1965 and 1976 — just an 11-year cohort. As a result, these definitions put nearly 78 million people in Gen Y and fewer than 45 million in GenX. There are fully 33 million more Gen Xers than Gen Y.* Hardly surprising, and not at all meaningful, that this much larger group buys about 10 percent more cars than the much smaller group.

This is where long division comes in. Let’s look at the rate of car buying on a per person basis for each of these two groups. By normalizing the data to account for the different number of people in each group, we get a much more accurate picture of the behavioral differences of individuals in each group – this is dead simple standard fare in statistical analysis. The 78 million Gen Yers bought about 3.7 million cars, or about 47.5 cars per 1,000 persons in the generation. Meanwhile, 45 million GenXers bought 3.3 million cars, or about 73.7 cars per 1,000. Rather than being just as likely or more likely than Gen X to buy cars, the typical member Gen Y is actually 36 percent less likely to buy a car than the previous generation.

Screen Shot 2015-04-22 at 12.16.47 PM
Table: City Observatory

Once you go to the trouble of normalizing the sales data to reflect the very different sizes of these “generations,” you get results that are pretty much exactly the opposite of what’s claimed in both the Bloomberg and Atlantic stories. Today, Millennials are buying new cars at a rate far lower than older generations. That’s consistent with other data we have showing Millennials being less likely to get drivers licenses, and when they do, driving fewer miles per year than previous generations.

To be fair, a really good answer to this question would require a bit more data sleuthing: Because automobile purchasing patterns vary over a person’s life cycle, you can’t accurately gauge the generational change in buying habits by comparing the current year buying habits of Millennials (average age: late 20s) with Gen X (average age: early 40s). The more interesting question to answer would be whether the average 25-year-old Millennial today is more or less likely to purchase a vehicle today than someone who was 25 in 2005, or in 1995 or in 1985. Unfortunately, we don’t have access to that data. However, if the folks at JD Power would be willing to dip into their considerable archives, we’d gladly do the computations.

No doubt this kind of story generates lots of clicks and tweets — witness the Natural Resources Defense Council’s panicky “Uh-oh” retweet of this story. Clearly that is the coin of the realm in journalism these days, but it’s just plain irresponsible to make an utterly phony claim based on data that hasn’t been adjusted to reflect the size of different groups in question. As Paul Krugman said in a simpler time, “don’t be making claims that can be disproved with a copy of the statistical abstract and a pocket calculator.” There’s even less excuse for this today.

A couple of technical notes: Our estimates of population by birth year are from the Census Bureau: Annual Estimates of the Resident Population by Sex, Single Year of Age, Race, and Hispanic Origin for the United States: April 1, 2010 to July 1, 2013. The exact numbers of cars purchased by each generation were not reported in either the Atlantic or Bloomberg articles, so we estimated the numbers to the nearest 100,000 based on the chart published by the Atlantic; our estimates square with the values for market share reported in the article (the table omits data for sales to “pre-boomers” which make up approximately 10 percent of car sales, and explains why the total market share doesn’t add to 100%). We use the terms “Gen Y” and “millennials“ interchangeably in this post.

_____________

* – Towards the end of his article, Derek Thompson acknowledges the big discrepancy in the sizes of Gen X and Gen Y, allowing that there are “15 to 20 million” more Millennials than Gen Xers. Not only is the actual difference about 33 million, it begs the question of whether why Thompson didn’t find the time to do the very basic long division normalization that would have given a much more reasonable, and much different answer to the question posed by his article.

  • Fred

    This does not account for car purchasers vs car drivers. I would bet that most 19-22 year olds drive cars they did not purchase. So 19-22 year olds artificially lower the /1000 Gen Y numbers and likely artificially increase the GenX/Boomer numbers because the millenials are driving cars purchased by their GenX/Boomer parents.

    Car purchase rates really seem like a poor way to determine what generations think about cars.

  • Komanoff

    Good work, Joe. But next time please spend a little more time on graphic presentation? The bar graph leading the story could and should have been much more communicative. The labels for “Gen Y” and “Gen X” (and “Boomers” for that matter) should have shown the respective birth-year ranges — not all of us know what those terms apply to. And the story could have been shortened by at least half. Indeed, the lede — “Atlantic and Bloomberg idiotically fail to adjust for population and falsely find Millennials buying more cars than Gen-X’ers” — got buried in your sixth graf.

  • davistrain

    And do the statistics cover the “tertiary market”–sales by private parties, family members, etc.? Unless JD Power covers all sales transactions recorded by the DMVs of all 50 states they may be missing some of the sales at the lower end of the automotive food chain.

  • mx

    All this could be determined far more usefully by surveying people about their transportation choices, car ownership, etc… Presumably that data exists somewhere? It would get around the many flaws in this kind of study by focusing on what people actually do, rather than just looking at car sales figures.

  • davistrain

    It looks like Mr Komanoff has a background in the news biz “burying the lede” is a term right out of the manual typewriter days. That said, he does bring up some interesting points, and his criticism of the somewhat arbitrary “Gen” designations is worth considering. Writers seem to love “shorthand” designations and cliches, and like to box stories into neat decades like the “Roaring 20s” and the “Counterculture 60s” when life is a lot more amorphous than that.

  • lunartree

    Gen Y here. I have a car, but I only bought it because the city I’m from pretty much makes it a necessity to live. Yeah, it’s not a good assessment of much.

  • Brian

    John is a hack of a “journalist” who begged for months to keep this site going. And he has the audacity to criticize Bloomberg?
    John- you should really look for another “job”.

  • Alicia

    Ah, drive-by trolling.

    If you have any meaningful critique, share it.

  • Alicia

    Car rentals should also be considered.

  • A few years ago, part of the Gen Y cohort were still too young to be buying cars. It shouldn’t be a surprise that people born in 1994 are buying more cars this year compared to a few years ago.
    The author is right to point out that the issue is whether people of the same age were more likely to buy cars in previous years.

  • BrettinSF

    Generation Y???? Ummmm… millennial has been common parlance for about 10 years now. LOL

  • I can assure you that the print media uses the term to this day, as does online media.

  • The labels are driven by trendoid journalism rather than actual demography and don’t have consistent meaning. Just look at the age ranges in the chart, that’s the substantive data.

  • Andres Dee

    If a certain demographic is renting or borrowing cars rather than owning more or less that the same demographic did a few years back, there’s a story, even if they’re all “driving”. Remember that Gen X had access to their parents’ cars and rentals, as well, if they chose them.

  • Fred

    I fully agree. Compare car usage of GenX when they were 20-30 to Millenial car usage from 20-30. That’s a worthwhile comparison. Or even, what percentage of 26yo GenX’s bought cars compared to 26yo Millenials.

  • Miles Bader

    Actually car purchases do say a lot about attitudes towards cars. Someone who bought is much more likely to use it (the marginal cost is much lower) than someone who must rent.

    Purchasers are also far, far, more likely to have bought into the whole car-as-a-lifestyle/fashion-statement/ego-booster thing that is one reason America’s car culture has been so tremendously damaging. Someone who rents is far more likely to consider the car as a mere (and somewhat expensive) tool to do something they need done…

  • Fred

    That still doesn’t account for people who own cars but didn’t buy them.

  • neroden

    FWIW GenX car purchases seem to have been down from Boomer car purchases at the same time in their lives, according to the fragmentary studies I’ve read. (Boomers are now getting old enough that they’re reducing their car purchases because of lifestyle changes due to age.) Steady decline in car culture since the 1950s.

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