Are Millennials Racing to Buy Cars? Nope

Crossposted from City Observatory.

Hot on the heels of claims that Millennials are buying houses come stories asserting that Millennials are suddenly big car buyers. We pointed out the flaws in the home-buying story earlier this month, and now let’s take a look at the car market.

The Chicago Tribune offered up a feature presenting “The Four Reasons Millennials are buying cars in big numbers,” assuring us that millennials just “got a late start” in car ownership, but are now getting credit cards, starting families and trooping into auto dealerships “just like previous generations.”

Similar stories have appeared elsewhere. The Portland Oregonian chimed in: “Millennials are becoming car owners after all.”

Not quite a year ago, we addressed similar claims purporting to show that Millennials were becoming just as likely to buy cars as previous generations. Actually, it turns out that on a per-person basis, Millennials are about 29 percent less likely than those in Gen X to purchase a car.

We pointed out that several of these stories rested on comparing different sized birth year cohorts (a 17-year group of so-called Gen Y with an 11-year group of so-called Gen X). After applying the highly sophisticated statistical technique known as “long division” to estimate the number of cars purchased per 1,000 persons in each generation, we showed that Gen Y was about 29 percent less likely than Gen X to purchase a car.

More generally though, we know that there’s a relationship between age and car-buying. Thirty-five-year-olds are much more likely to own and buy cars than 20-year-olds. So as Millennials age out of their teen years and age into their thirties, it’s hardly surprising that the number of Millennials who are car owners increases. But the real question—as we pointed out with housing—is whether Millennials are buying as many cars as did previous generations.

The answer is no.

Auto industry analysts at the National Automobile Dealer’s Association—who have a very strong stake in the outcome—are pretty glum about sales prospects of the Millennial generation. NADA’s economist Steven Szakaly predicts it will take four Millennials to equal the sales impact of a single Boomer. This is due to a combination of factors, including Millennials’ weaker income and job prospects, and lower propensity to drive and own cars. Its also the case that waiting longer to buy one’s first car means that one is likely to own fewer cars over a lifetime, and as with housing there’s no evidence that young adults are catching up to previous generations as they age.

As we said last year, the real gold standard for intergenerational comparisons would be to look at the rate of car ownership for different generations when they were at the same point in their life-cycle, i.e., look at the car buying habits of Boomers when they were in late twenties and early thirties (during the seventies and eighties), and compare them with the habits of Gen X (25-34 in the nineties) and Millennials (25-34 from 2005 onward). Alas, we don’t have that data.

But we do have another indicator: the fraction of young adults who have drivers licenses.

Michael Sivak and Brandon Schoettle at the University of Michigan’s Transportation Research Institute analyzed US DOT data, and found big declines in the rate at which young adults get driver’s licenses. At every age up to 50 years old, a smaller fraction of U.S. adults is getting a driver’s license than a few decades ago. Today, only about 60 percent of 18-year-olds have a licence, compared with about 80 percent in the 1980s. Even among those in their late twenties and early thirties the licensing rate is down 10 or more percentage points from earlier decades. And the declines appear to be persisting and continuing as time goes on: Between 2008 and 2014, the rate of licensing declined from 82.0 percent to 76.7 percent among 20 to 25-year-olds.

 

Screen Shot 2016-04-25 at 2.55.10 PM

Another bit of evidence comes from financial markets. The Federal Reserve Bank of New York studied credit records to determine what fraction of persons in each age group took out an auto loan. While the total volume of automobile lending declined sharply between 2003 and 2015, the decline was most pronounced among younger age groups. Lenders made about 25 auto loans per 100 persons in their mid thirties in 2003, but only about 17 loans per 100 the same age cohort in 2015. Only those 65 or older are more likely to take out a car loan today than in 2003.

When it comes to America’s much storied romance with the car, it’s apparent that ardor has cooled, especially among Millennials. We’re buying fewer cars, we’re taking out fewer car loans, we’re waiting longer to get a driver’s license, and fewer of us are ultimately doing so.

  • Richard

    “After applying the highly sophisticated statistical technique known as “long division.” Burn.

  • JerichoWhiskey

    Well, tax season recently ended and that means all the Millennials who went to college certainly have seen their 1098-E and realized that money could have went to buying a car or at least paid rent for a precious month or two.

  • J Milan

    The only hope this planet has is the financial burden of owning a personal rocket becomes too much.

    Nothing else will defeat an addiction of convenience.

  • SFnative74

    In other words, there is no hope, and I agree. Nothing can overcome our innate human nature. We may be too smart and adaptable for all of us to be killed off completely, but it will be a pretty large percentage of humanity that will be gone due to our selfish drive for convenience and our desire to avoid death and have every life last as long as possible.

  • sfparkripoff

    Now the largest generation in the U.S., millennials bought 4 million
    cars and trucks in the U.S. last year, second only to the baby boomers,
    according to J.D. Power’s Power Information Network, which defines
    millennials as those between 21 and 38 in 2015. Millennials’ share of
    the new car market jumped to 28 percent. In the country’s biggest car
    market, California, millennials outpaced boomers for the first time.

    “This whole idea that they’re not going to need cars is absolutely
    ridiculous,” said Steven Szakaly, the chief economist for the National
    Automobile Dealers Association. “The new car buyer age is just happening
    much later.” http://bigstory.ap.org/article/e79c1cee3730465d95f4e133239ca14b/millennials-are-finally-arriving-car-market

  • Yep. As a Millennial myself, I have looked at numerous cars to buy. The only reason that I haven’t bought one is because I lack funding to do so. I know several of my friends who are in a similar position.

  • sojourner_7

    OMG. You mean all those anti-car, anti-parking, “automobiles will be unneeded in the next few years” streetsblog commenters could be mistaken? Hark. Reality prevails. Fix our roads. Quit acting like parking lots are some type of plague on humanity. Increase efficiency in auto travel. Decrease pollution. Infrastructure is critical to overall economy for everyone, even if you choose not to own a car.

  • Did you read the article? Is this sarcasm or something?

  • ahwr

    .http://www.bls.gov/cex/2004/aggregate/age.pdf
    http://www.bls.gov/cex/2014/aggregate/age.pdf
    http://www.bls.gov/cex/csxfaqs.htm#q4

    Households led by someone 25-34 have seen their income drop ~7% compared to ten years ago adjusted for inflation. Car ownership rate down from 90% to 88%. But cars per adult in those households is down ~11%. Home ownership rate down from 49% to 39%. Number of children down 9%. Do people want to own fewer cars, have fewer/no kids and rent? Or are they just broke? What happens if there’s some economic uptick? Is that likely to happen, or has there been a fundamental economic shift that will prevent that? (Young adults still living with their parents aren’t included here.)

  • Alicia

    Nope, he doesn’t want to read. He just wants to get in pro-car talking points, even if the facts don’t line up.

  • Dan

    It appears that all ages 62 and under show lower rate of loan originations and all you may have discovered is that most people don’t have enough money to buy a new car and/or cars purchased in the 2000s are more durable than cars built in 1990s. If cars are more durable they will get replaced less.

  • sojourner_7

    The numbers have changed, the age for buying is different, just like the age of having children. And yes, cars do last longer. Statistics can skew anything, and make various points more or less salient. But cars are still in the picture, and will factor in a substancial way for future transportation needs, especially with newer technological developments. This article is an attempt to refute evidence that points towards the ongoing need to continue to incorporate automobiles into planning and infrastructure elements.

  • Infrastructure is critical, but there is no shortage of infrastructure for cars. It’s infrastructure for everything else that is missing.

  • Kenny Easwaran

    Isn’t *everything* on Streetsblog about the need to incorporate automobiles into planning and infrastructure elements, instead of just layering them on top and destroying the planning and infrastructure with automobiles?

  • sojourner_7

    Sadly, no it’s not. There is the element that isn’t even subtle, that is loudly against autos, roads, and parking. Starting with editor-in-chief Ben Fried, who editorializes aganst lifestyle areas such as “highway-enabled land use”, not surprising for a NYC point of view but not reflective of the bulk of the US in any way.

  • Joe R.

    No, it’s a movement against autos in places where they’re an awful fit, like NYC. I personally don’t give a rat’s behind if most of the rest of the country chooses an auto-addicted lifestyle. Just keep your cars out of dense urban areas. And don’t ask us urbanites to continue subsidizing sprawling development as we’ve been doing for the last 60 years.

  • sojourner_7

    Exactly. Your anti-whatever *you* don’t like attitude is precisely the reputation that streetsblog is known for.

  • Joe R.

    No, it’s being against something which causes 100% of the people who live in cities problems but at best benefits a tiny minority. It’s a shame you just can’t see that private automobiles are bad fit in cities. The math works against cars in cities. There wouldn’t be enough space for roads and parking if 100% of city dwellers used private automobiles. Moreover, the ensuing congestion would pretty much make them useless for practical transport. Therefore, at best only a small number can derive any benefit from private autos before their sheer numbers overwhelm the space. However, even that small percentage causes massive delays to buses, bikes, and pedestrians. It also negatively affects the air quality.

    Cars are best used in rural areas where by definition there aren’t enough potential users to congest roads or affect the air quality very much. Advocating for cars in cities makes about as much sense as advocating for a subway in rural Nebraska.

  • Joe R.

    I think there are several fundamental differences here between millennials and the preceding generations:

    1) Cars are more a need than a want. Unfortunately due to the relative scarcity of places where you can live without a private car, millennials are forced into owning one. Compare this to older generations where a car represented status, freedom, your personality, etc. Older generations wanted to own cars, even if they lived in a place where they didn’t really need to.

    2) Cars will be more likely to be kept until they wear out, not until some newer model they lust for comes out. Contrast this to the boomers who often bought new cars every 3 to 5 years.

    3) Millennials are actually very highly likely to want to live in cities and use public transit. Unfortunately, 60 years of suburban-centric planning means both things are in short supply. If we started infill development, rezoning, and building transit the number of millennials owning cars would decline drastically. To many in that generation, it’s a necessary evil they would just as soon not spend their money on.

    4) Lack of money to buy cars. Unlike previous generations, many millennials can’t afford a car. Even those who have one through necessity often really can’t.

    When you put all these things together it’s clear cars aren’t going away in the near future but at the same time the trend is down. That downward trend will get even steeper when self-driving cars are viable. It will take decades to get rid of the sprawl which necessitates car dependency, but self-driving cars could obviate the need to own a car in such places in the not too distant future. Given 1 through 4, I think it’s highly likely many millennials (and also those of other generations) will do exactly that. No matter how you slice it, a car is a huge expense. With upward mobility pretty much gone, people will want to trim their budgets any way they can. Getting rid of your car is the best way to start.

  • Alicia

    Your anti-whatever *you* don’t like

    Nice way to accentuate your shitty reading comprehension.

  • Joe R.

    I wouldn’t read too much into that. It seems like an unusual turn of events caused a temporary uptick in car buying. Low interest rates won’t stay around forever, and gas prices are already starting to tick up. I’d say many of these millenials bought their first car. Unlike previous generations, they won’t be back for the next one in 3 to 5 years. They’ll keep their car until it wears out, which could be 15 to 20 years easily. By then the landscape in the US may have changed so much they won’t be interested in replacing it.

  • Alicia

    not surprising for a NYC point of view but not reflective of the bulk of the US in any way.

    As someone who lives hundreds of miles away from NYC, please speak for yourself only and not “the bulk of the US.” I want to reduce car-only planning in my area, too.

  • Joe R.

    At this point the chances of a long term economic uptick are slim to none. We’re entering a new era where we’re resource limited. That means two choices—either reduce the population or get used to a lower standard of living. Private autos are the most resource intensive way to travel. As such, simple supply and demand for the raw materials used to make cars and build roads will see to it that they’re unaffordable for an ever larger percentage of the population. The days of mass motoring are over. The only question is will they end with a whimper or a boom? Or put another way, will car ownership/use just gradually fall with each generation, or will it happen suddenly when we have a critical shortage or price jump of some commodity needed for mass motoring, like crude oil?

  • sojourner_7

    Extremes. That’s what is so prevalent on streetsblog. I didn’t mention “car only ” planning. Its not transit vs mass transit, or cars vs everything else. Should be a balance, and a need for coordination. As we move away from ICE power to EV, cars will remain.

  • sojourner_7

    When is it you expect NYC to be free of these cars that cause problems for “100%” of the people? Extreme positions are divisive, which seems your intent. And your comment history has a divisive pattern, including public lynching of police officers? Anger management… consider it.

  • Joe R.

    Getting rid of private autos entirely would be a extreme position if I suggested it for the entire USA, which I don’t. I’m suggesting it for the borough of Manhattan for starters, eventually for the other four boroughs as we improve mass transit. That’s hardly an extreme position. It’s an eminently sensible one which would make life way better for all city residents. Calling something you don’t like an extreme position is a typical way to avoid discussing the topic rationally.

    As for public lynching of police officers, take a look at the culture of abuse at the NYPD which starts at the top. A public lynching of the last few police chiefs wouldn’t be entirely out of order given that. In fact, I think they would be getting off easy compared to some other ideas I had (think of the dining room scene towards the end in the movie Hannibal). These people are no better than leaders of criminal enterprise, and should be treated as such. China often public executes officials who have abused their power. I think it’s a good policy to keep leaders more honest.

  • Joe R.

    When are these mythical EVs coming? I’ve been hearing this since I was a child (I’m 53 now). Last I checked the latest forecast is for them to constitute only 35% of new vehicle purchases by 2040. I might object less to motor vehicles in urban areas if at least they didn’t affect the air quality but it seems that’s not going to happen in my lifetime at the rate we’re currently adopting EVs. Low gas prices aren’t helping, either.

    Balance between private cars and other modes is fine for the suburbs. The suburbs need more options to get around. In cities those options largely exist, and therefore planning should focus nearly 100% on transit, biking, and walking, along with making the lives of drivers of delivery or emergency vehicles easier. As I said earlier, match the mode to the location.

  • Alicia

    Extremes.

    Like characterizing people on this site (including the Oregon-based author of the post) as having a “NYC point of view?

    Step away from the ridiculously cliched rhetoric, and maybe you’ll have a chance of people taking you seriously. Until then, I’ll grab the popcorn and watch you dig yourself into a deeper hole.

  • sojourner_7

    The NYC point of view was attributed to Joe. Check your reading comprehension. And streets blog has quite the reputation for attracting nut jobs. Not my label, but one used nonetheless. If only the other 90% of the country would do what you’ve decided they need to do. Sigh. Must be frustrating. Me, no worries.

  • Alicia

    LMAO.

    The NYC point of view was attributed to Joe.

    I checked again, and you’re flat-out lying, now. You weren’t responding to Joe, nor referring to him:

    Your full quote was “Starting with editor-in-chief Ben Fried, who editorializes aganst lifestyle areas such as “highway-enabled land use”, not surprising for a NYC point of view but not reflective of the bulk of the US in any way.”

    You can crawl back under your bridge whenever you want. Until you do, though, I’ll enjoy watching you continue to dig.

  • sojourner_7

    Whatever, Alice, your obsession with digging holes, bridges, popcorn, etc are revealing. The fact is that cursory Internet search reflected that Ben Fried was based in NYC. Still does. Maybe he moved, I don’t really care. I’ve made a few references to NYC. By the way, defensive much?

  • Alicia

    LMAO again. What another idiotic comment from you.

    Whatever, Alice

    Who’s Alice?

    your obsession with digging holes, bridges, popcorn, etc are revealing.
    My obsession are revealing? What sort of grammar is that?

    The fact is that cursory Internet search reflected that Ben Fried was based in NYC.
    So basically, in trying to move the goalposts, you admit you’re not talking about Joe after all. It seems like you don’t really know what you’re talking about at all.

  • Joe R.

    At this point I think it’s worth listing some common techniques used by people who can’t win an argument on its own merits:

    1) Pretend to side with at least parts of the other side’s viewpoint so as to seem like a legitimate participant in the discussion.

    2) Deflect from the argument by emphasizing mostly irrelevant quotes from the other side while ignoring the main thrust of the argument (i.e. the emphasis here on the bridges and popcorn while conveniently not responding to your valid accusations about outright lying).

    3) Characterizing the other side’s views or their person as “extreme”, “radical”, “divisive”, etc.

    4) Failing to acknowledge when the other side has poked factual holes in their arguments.

    5) Using hot button words designed to provoke an emotional response from the other side.

    6) Confusing healthy debating on a topic with being argumentative or divisive.

    7) Asking the other side for links to back up their viewpoint while failing to provide any for their side of the argument.

    8) Intentionally coming to a site where most posters hold a contrary viewpoint to theirs for the express purpose of preventing any real discussion of the topic at hand.

    What sojourner_7 is doing here would be equivalent to going to a car enthusiast site and posting “cars suck”. Of course, you’re going to get mostly negative responses. Such a post wouldn’t serve to start any sort of constructive discussion.

    I wonder if sojourner_7 and catfink are the same person?

  • Kent Maxwell

    Vehicle sales will drop more and more as the baby boomers die off. Everyone else don’t have the money they have, and the way it’s going never will, it’s going to be bad. after the boomers are gone the vehicle sales will noise dive. The housing will dump, currently no homes are being built or sold the common working Majority. They have no homes, no retirement, no savings, paid shitty wages and can’t afford anything. Must work til they Die. It’s going to be ugly in about 10 20 YRS.! Maybe sooner if the majority wakes up to they are just existing. Work to die, die to work. Not much of a life there.

ALSO ON STREETSBLOG

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

|
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) […]

Ford Still Trying to Get Millennials to Like Them

|
Poor Ford. They’re trying so hard. They’re like the Cassandra of the car world, foretelling the future of less driving, more transportation options, a preference for car-lite urban living. They’ve been re-designing their Mustang to appeal to younger folks and stressing their move away from cars and toward “mobility opportunities” (like driving cars). And now […]

Revisiting the Peak Car Debate

|
Cross-posted from the Frontier Group. I’ve never liked the term “peak car.” First, it was always unclear exactly what was supposed to be peaking – total vehicle travel, per-capita travel, car ownership, or all of the above? Second, like peak oil before it, “peak car” applies a catchy name to a collection of concepts that […]

True Story: Ratings Agency Pins Dangerous Roads on Car-Free Young People

|
The financial ratings agency Standard & Poor’s has a new report out that presents a bizarre theory about dangerous conditions on American streets. It’s the Millennials’ fault, “but not in the way you think,” they say. Prepare yourself for some ratings agency clickbait! Standard & Poor’s blames Millennials not only for the poor state of transportation infrastructure but also the […]