Looking back through the annals of automotive history, distinct paradigm shifts are clearly evident. Through the years, many have said that the American fleet would grow significantly larger, decidedly shrink, gain some weight, lose the weight, etc. Fuel-efficiency would be a top priority for one generation, and that priority would fade with the succeeding generation. Trends occurred not on the whim of the automaker, but because the desires and needs of the consumer changed. For automakers to anticipate trends in the future, it is important to look at the demographic that will be buying their vehicles. According to CNBC, the key demographic that will create the next shift in car buying is Millennials.
A major misconception exists regarding Millennials: they are often viewed as a generation that does not particularly care about car ownership. The reality is much different, as Millennials are actually buying more vehicles than Generation Xers. According to CNBC, “The American love affair with cars isn’t dead—it’s just being reshaped by Millennials.”
While many Millennials are delaying major life events that historically occurred earlier, such as vehicle ownership, this does not mean they will not be buying vehicles in the future. In fact, according to research conducted by AutoTrader, Millennials currently account for only 12 percent of new car sales. However, that number is expected to skyrocket to 40 percent by the year 2020.
As Millennials will occupy such a large percentage of the market, it becomes important for automakers to study what they most value in their vehicles. An AutoTrader study found that Millennials believe in the maxim “less is more.” They are enthusiastic about smaller vehicles, which are more fuel-efficient and better for the environment. According to Sustainable Brands, Millennials are the “most sustainability-conscious generation yet,” which explains their strong interest in alternative energy vehicles.
While Millennials the interest in alternative energy vehicles is strong, they are often saddled with massive debt and these vehicles remain out of their price range. Affordability is a major priority for Millennials so, for now, a fuel-efficient, gas powered vehicle best fits their budget and priorities. As Millennials age and their wallets begin to thicken, however, it stands to reason that alternative energy vehicle sales will improve significantly.
Every generation has its unique quirks. The music of Woodstock was replaced by disco in roller skating rinks. Just as tastes and trends change, so do priorities. While Millennials today are not buying vehicles at the same rate as previous generations, they will begin to purchase significantly more vehicles in the near future. To stay ahead of the competition, manufacturers would be wise to catering to the desires of Millennials today rather than simply produce vehicles built for past generations.