Media post: Why Are Millennials and Gen Z Less Interested in Buying Cars?

After a significant slump, the automotive industry saw a rebound for vehicle sales in 2022. But even with that rebound, car manufacturers have found that younger drivers, particularly Millennials and Gen Z, simply aren’t as interested in buying cars. According to Experian’s Q3 2020 Market Trends Review, these generations represent very little growth, increasing only marginally in the last year — only about 3 to 4 percent.

So what’s behind this lethargic growth when it comes to newer drivers? Is it financial? Cultural? Environmental concerns? A combination of all these things? Let’s examine some of the main reasons why Millennials and Gen Z aren’t as interested in buying cars as previous generations.

Lack of Funds

It’s no secret that Millennials and Gen Z have far less disposable income than their predecessors. Baby Boomers and Gen X enjoyed a level of prosperity that simply does not exist for younger generations. The numbers don’t lie: wages have been roughly static for most Americans for the last fifty years. The average cost of a college education in 1973 was $8,131; in 2018 it was $20,050. Rising living costs and punishing student debt have left younger individuals disinclined or unable to own a vehicle, having to prioritize more essential expenses like food and rent (which, incidentally, averaged $350 a month in 1985 and is $1,191 today).

High Ownership Costs

Speaking of rising prices for things, vehicles are expensive, and that doesn’t just mean fuel costs (although we all know those have risen drastically over the years). A new Dodge pickup might cost you around $13,000 in 1986, whereas in 2022 it’s closer to $28,000. Even used cars are more expensive than they used to be. And there’s not just fuel to think about, but insurance — according to the Car Insurance Facts and Statistics 2023 report by Forbes Advisor, insurance premiums have continued to rise, making it difficult to afford for many. Although some costs can be mitigated by comparing auto insurance quotes (as advised by The Zebra’s Ross Martin) and finding car models with the lowest insurance premiums, that’s not always enough for every consumer.

Remote Work

The rise of the Internet has transformed life dramatically since the era of the Boomers and Gen X. One such transformation is the opportunity for remote work. Even prior to the COVID-19 pandemic, which forced many individuals into a work-from-home situation, people were using the Internet to do their jobs remotely. For many, the daily commute has become unnecessary or at least undesirable. Although many companies are pushing for a return to office life, work-from-home is probably here to stay, and many businesses — including auto manufacturers — are going to have to adjust their revenue models accordingly.

Alternative Transportation

Even when they do have to go into the office, Millennials and Gen Z tend to opt for other modes of transportation, such as ride-sharing, public transportation, bicycles, electric scooters, or other means that don’t require owning a vehicle. This is particularly true in urban areas, where there tend to be more convenient, cost-effective, and environmentally friendly transportation solutions. Many of these options bypass traffic congestion and the need to pay expensive parking fees, further diminishing the appeal of car ownership.

Environmental Consciousness

As a general rule, Millennials and Gen Z tend to be much more concerned about the environment than previous generations. Younger people are much more active in reducing carbon emissions, creating sustainable living, and embracing greener alternatives. As a result, things like walking, biking, or public transportation align much more with their values than buying a gas-guzzling SUV. Cars also contribute to noise and air pollution in addition to contributing to climate change, which is another reason why the younger generations tend to eschew buying them.

Online Shopping

Something most of us can relate to when it comes to how the Internet has changed modern life: shopping online. Brick-and-mortar retail stores have had a difficult time since the ascendancy of Amazon and other online retailers, and Millennials and Gen Z in particular, who have grown up with the Internet, are more accustomed to ordering something online than traveling to a physical store or restaurant to get what they want. With a few clicks or taps on a cell phone, they can have food, supplies, or whatever else delivered right to their doorstep, making driving down to the store an unnecessary step.

What Happens Next?

So how will the auto industry survive into the future if younger people aren’t buying cars — or simply can’t afford to? At the very least, the industry will have to adjust its expectations and revenue models. One possible solution is to invest in self-driving vehicles, which could lead to more communal transportation — individuals could call for a ride a la Uberor Lyft and be automatically driven to their destination. But whatever happens, it’s likely that the auto industry as it exists today will simply have to change with the times — or become a thing of the past.