Where Will Millennials Take the Car Industry?
- August 22, 2017
- Posted by: Mike Brown
- Category: Auto Loans
Cars and the automobile industry have long been backbones of both the American economy and way of life.
In the early 20th century, Henry Ford had the foresight to envision a process where cars could be mass produced on an assembly-line so that each and every American could own an automobile.
In the post-war era, it was the American-based General Motors Company, commonly referred to as GM, that produced cars on a global scale to become one of the most powerful companies in the world. Understanding its irreplaceable role in the American economy, the U.S. Treasury Department invested nearly $50 billion in GM to save the automobile company after it went bankrupt during the 2009 Financial Crisis.
The automobile industry is constantly evolving, and quite fittingly, never staying still. All one has to do is look at the way it has changed in the past decade. In 2017, we now have self-driving cars, electric cars that run like a computer, and more hybrid vehicles than ever before. Ride-sharing services like Uber and Lyft have done their best to shake-up the industry. And, not too long ago, the now-archaic Hummer used to guzzle gas and hog the road.
In what direction is the automobile industry headed next?
To find the answer, LendEDU conducted a poll of car-owning millennials in which we asked them a series of questions related to their car-habits. Not only are they largest-living generation, but millennials will soon become the most powerful spenders in the U.S. Their spending tendencies will play a key role in deciphering the future of the American economy.
Observations & Analysis
Don't Worry, the Future of Cars Looks Secure
In today's world, it seems a new piece of technology comes out everyday that renders a similar, but older service obsolete. But, according to a few questions from LendEDU's poll, that does not appear likely to happen with the automobile industry.
We asked 501 car-owning millennials the following question: "Do you consider owning a car to be a necessity in today's society?" An overwhelming majority of respondents, 93.01 percent, said "yes," while only 6.99 percent of millennials answered "no."
A similar question immediately followed the aforementioned question with one modification: "In 20 years, do you believe that owning a car will be a necessity?" This time, less millennials, 79.24 percent, thought a car would be a necessity, while 20.76 percent believed automobiles will not be a necessity in 20 years.
Albeit a small percentage, it was interesting to see that nearly 14 percent more millennials thought that owning a car will become unnecessary in 20 years as opposed to now. As they have grown up watching new technological advancements wipe out entire industries, perhaps they foresee the same thing happening with automobiles. However, when we asked our poll participants if they think their children will own cars, 93.01 percent of them answered "yes."
The following question was asked to 501 car-owning millennials: "Do you see yourself buying another car in five years?" 77.64 percent of respondents said they could picture buying another car, while 22.36 percent could not. It was interesting that the results of this question were quite similar to the results of the question in which we asked millennials if owning a car will be necessary in 20 years. Maybe, the automobile industry will slow down sooner than we think, or maybe most of the respondents are satisfied with their current cars and are not afraid to rack up the miles.
The answers we received for one of the poll questions proved that ride-sharing services like Uber and Lyft may be having a moderate influence on the car industry. When asked if the growth in ride-sharing services like Uber have made our respondents re-think car ownership, 16.57 percent of car-owning millennials said "yes." Although the clear minority, 16.57 percent of millennials re-thinking car-ownership due to the rise of Uber and Lyft is a cohort that did not exist just a few years ago and is nothing to scoff at.
Finally, on to the subject of the cars of the future. We asked the following: "If possible, would you give up manually driving a car if it meant that you could have a self-driving car?" 57.49 percent of car-owning millennials said they could not give up manually driving a car, while 42.51 percent said they would. The results of this particular question were a lot tighter than anticipated and demonstrate the openness many millennials have towards self-driving cars - an openness that is not as prevalent with older American consumers.
When it came to "green" or hybrid cars, more car-owning millennials were in favor of purchasing an environmentally-friendly car. The simple majority of respondents, 50.10 percent, said they would prefer owning a "green" or hybrid car over a traditional car, while 49.90 percent would opt for a traditional car. Similar to the question pertaining to self-driving cars, millennials are clearly much more ready for the cars of the future.
How Do Millennials Handle the Costs of a Car?
It is no secret that cars are expensive and can become even more expensive over time with maintenance costs and unexpected accidents. Because of this, auto loans are a popular way to finance cars without breaking the bank.
We asked 501 car-owning millennials if they used an auto loan to finance their cars. More of our respondents, 51.50 percent, did not use an auto loan to finance their cars than those that did, which was 48.50 percent. This data falls closely in line with statistics from the Federal Reserve Bank of New York, which estimated that 43 percent of the U.S. adult population owes money on a car.
Out of the car-owning millennial respondents that have used auto loans to purchase their cars, 71.19 percent of them are still paying off their loans, while 28.81 percent are not making auto loan payments anymore.
Sticking with the same auto loan cohort, 53.91 percent of them answered "yes," when we asked the following: "Did you compare auto financing options online before purchasing your vehicle?" Despite the fact that 46.09 percent of respondents had not compared auto financing options, the results of this question were quite welcomed. You should always take serious time considering each and every financing option available to you because getting the best possible offer could make all the difference between ending up in serious debt or making comfortable, hassle-free payments.
When you purchase an automobile, you can expect two expenses to stay with you for the duration of owning that car: maintenance costs and insurance costs. We asked car-owning millennials, "Which of the following best describes your feeling after purchasing a car?" 39.12 percent of respondents were surprised by the maintenance costs, while 60.88 percent stated that they were not surprised. Maintenance costs can rack up quite a hefty bill, so it is encouraging that a comfortable majority of millennials were ready for it.
Interestingly, when the question was modified to discuss insurance costs, more car-owning millennials were surprised by the costs of insurance after purchasing their cars. 45.31 percent answered, "I was surprised by the insurance costs." Meanwhile, 54.69 percent of respondents stated that they were not surprised by the insurance costs. While we have no driver statistics for our respondents, auto insurance costs do tend to rise after traffic violations or accidents, amongst many other things. Perhaps there is a lack of education regarding how auto insurance costs can be quite volatile during the time that you own a car.
Miscellaneous Millennial Car Statistics
We wanted to pick up on some millennial car trends unrelated to the financial aspect of owning an automobile. Yes, cars are an effective mode of transportation, a serious investment, and a potential money-pit, but for many folks, owning a car is so much more than that: It is a hobby and a sense of pride.
We asked 501 car-owning millennial respondents the following: "Do you know how to change the oil in your car?" 67.27 percent of poll participants claim that they do know how to change the oil in their cars, while 32.73 percent were totally honest in their lack of oil-changing skills.
Next, we asked the same group of respondents if they knew how to change a tire on their car. Believe it or not, 80.84 percent of millennials stated they knew how to change a tire, more than those that knew how to change their oil. Only 19.16 percent of respondents answered that they lacked the knowledge necessary to change a tire.
We then posed the following question: "Do you view your car as a status symbol?" The majority of respondents, 66.47 percent, did not view their cars as status symbols, while 33.53 percent did see their automobiles as status symbols. It is true that owning a luxury car can not only be nice, but can change the image someone has of you. However, it is imperative to remember that, first and foremost, cars are a necessary mode of transportation and commuting, and everything else is secondary. It is when you want to own a nice car to impress the people around you that you will wind up paying for something that you cannot afford, which will lead to suffocating debt.
Judging from one of LendEDU's poll questions, it seems that most millennials are satisfied with their decisions to purchase cars. When asked to describe their feelings after purchasing a car, 67.66 percent of car-owning millennials said "owning a car is not a hassle," while 32.34 percent of respondents did describe car ownership as a hassle.
Finally, we wanted to find out how many millennials have driven for Uber or Lyft, or at least considered it. We asked this question: "Which of the following best describes your experience with a car?" 11.58 percent stated that they have driven for a ride-share program like Uber or Lyft. 38.32 percent of respondents answered with the following: "I have not driven for a ride-share program, but I have considered it." And, the simple majority of car-owning millennials, 50.10 percent, said they have not driven for such a service and have not considered doing so. For the amount of Uber and Lyft drivers that are available at any given time in any given location, it was a bit surprising to see that only 11.58 percent of millennial car-owners have driven for a company like Uber. It was even more eye-opening to see that half of the respondents have not even given thought to driving for Uber or Lyft.
Full Millennials & Car Survey
1. Do you know how to change the oil in your car?
- 67.27% answered "yes."
- 32.73% answered "no."
2. Do you know how to change a tire on your car?
- 80.84% answered "yes."
- 19.16% answered "no."
3. Do you consider owning a car to be a necessity in today's society?
- 93.01% answered "yes."
- 6.99% answered "no."
4. In 20 years, do you believe that owning a car will be a necessity?
- 79.24% answered "yes."
- 20.76% answered "no."
5. Do you see yourself buying another car in the next five years?
- 77.64% answered "yes."
- 22.36% answered "no."
6. Did you use an auto loan to finance your car?
- 51.50% answered "no."
- 48.50% answered "yes."
7. (Asked to those who answered "A" to Q6) Are you still paying off your auto loan?
- 71.19% answered "yes."
- 28.81% answered "no."
8. (Asked to those who answered "A" to Q6) Did you compare auto financing options online before purchasing your vehicle?
- 53.91% answered "yes."
- 46.09% answered "no."
9. Has the growth in ride-sharing (Uber, Lyft, etc.) made you re-think car ownership?
- 83.43% answered "no."
- 16.57% answered "yes."
10. Do you think your children will own cars?
- 93.01% answered "yes."
- 6.99% answered "no."
11. Do you view your car as a status symbol?
- 66.47% answered "yes."
- 33.53% answered "yes."
12. Which of the following best describes your feeling after purchasing a car?
- 60.88% answered "I wasn't surprised by the maintenance costs."
- 39.12% answered "I was surprised by the maintenance costs."
13. Which of the following best describes your feeling after purchasing a car?
- 54.69% answered "I wasn't surprised by the insurance costs."
- 45.31% answered "I was surprised by the insurance costs."
14. Which of the following best describes your feeling after purchasing a car?
- 67.66% answered "owning a car is not a hassle."
- 32.34% answered "owning a car is a hassle."
15. If possible, would you give up manually driving a car if it meant that you could have a self-driving car?
- 57.49% answered "no."
- 42.51% answered "yes."
16. Would you prefer to purchase a "green" or hybrid car over a traditional car?
- 50.10% answered "yes."
- 49.90% answered "no."
17. Which of the following best describes your experience with a car?
- 50.10% answered "I have not driven for a ride-share program, and I have not considered it."
- 38.32% answered "I have not driven for a ride share program, but I have considered it."
- 11.58% answered "I have driven for a ride share program such as Uber or Lyft."
All results from this study came from a poll commissioned by LendEDU that was conducted online by online polling company Pollfish. The poll ran over a two-day span from August 17, 2017 to August 18, 2018. In total, 501 car-owning millennials participated in this poll. Using screening questions, we were able to filter our respondents so that the only people participating in the poll were millennial Americans that currently own a car. Respondents were asked to answer all questions truthfully and to the best of their ability.