Millennial Car Sales Are Declining – But Who Is To Blame?
Millennials are copping the blame for plenty of things that are going wrong in society and the recent decline in car sales has just been added to that list. Recent reports are indicating that the changing mindset of young people are negatively impacting new car sales figures and leading to a decline in the personal transport industry.
New car sales have plummeted by 10.1% in Australia over the past year contributing to an even longer period of decline in sales than even the 2008 GFC caused. The country’s 3500 car dealers are frustrated and pointing the finger at banks and lenders saying they’re making it harder for young people to secure the loans they need to purchase a car. The banks however, are assuring they have roughly the same rejection rates they’ve always had despite the recent royal commission.
This indicates that its millennials choosing not to purchase a new car, rather than them wanting to, but not being able to.
We wanted to dig a little deeper into why that is so we surveyed our members who also happen to be students. The results made it pretty clear that car ownership just doesn’t gel with the modern lifestyle these millennials are living.
Firstly, owning a car is pretty expensive. Without even thinking about the cash you have to put upfront to purchase one in the first place, the ongoing expenses are costing Aussies households on average $18,221 per year. That’s adding up costs such as registration, insurance, license fees, fuel costs, parking, tolls and servicing and maintenance. GoGet’s student survey tells us that the expense is the number one deterrent to buying a new car for more than 75% of students.
Then there’s the practicality. Parking is becoming a major issue in our capital cities and most accommodation in the budget of millennials doesn’t include a designated spot. That leaves parking on the street, where you potentially have to deal with time restrictions and hourly fees, or renting a permanent spot either in a commercial facility or through websites that allow you to rent from other consumers.
A part of the millennial mindset that differs significantly from past generations is the idea of a short-term lifestyle. Millennials are prioritising their day-to-day lifestyle over long-term goals meaning they’re choosing to rent in their desired suburbs rather than buy in an undesired suburb or saving money for travel rather than investing it.
This impacts the need to buy a car in two ways. The first is that these desired suburbs where millennials are renting are often closer to public transport or within walking distance of university, supermarkets and leisure activities, negating the need for a car. More than 70% of GoGet’s student users use public transport as their main mode of transport.
The second comes down to the fact that investing in car requires a long-term need for it to be worth it. With more millennials travelling than ever before, moving cities for jobs and doing stints living or studying overseas, they don’t have that long-term need for a car.
The rising popularity of modern services such as car sharing is also playing an important role with 74.25% of the students surveyed saying that access to carsharing services is the reason they’ve put off buying a new car.
But blame is a strong word, and perhaps the wrong one to use in the headline of this story. The word ‘thank’ seems like a much more apt substitution because it’s this millennial mindset that is helping to significantly reduce things like road congestion and carbon emissions from personal transport. In the bigger picture, this reduced car usage could go on to reduce the amount of land that gets redeveloped for use as parking space. It could even spark a governmental shift toward greener transport solutions and the necessary funding to champion services like car share and better public transport in and between our cities.
Of course, that’s thinking much further into the future. Millennials decision not to purchase their first car or upgrade their existing cars is helping us all right now. Perhaps we could all learn from their new way of thinking and join them in doing our bit to improve our environmental future.