The youngest generation of car buyers is putting the brake on new car purchases in 2013, says an analysis by Edmunds.com in Santa Monica, Calif.
As of August 2013 (the latest figures available), consumers between the ages of 18 to 34 had purchased 11.4 percent of all new cars, down from 12.6 in 2012. However, the rate is higher than 2011, when this age group, also known as Millennials, represented just 10.8 percent of new car sales.
This recent dip in sales can be attributed to lack of employment, says Lacey Plache, chief economist for Edmunds.com. In fact, in 2012, jobs for 25-to-34 year olds increased 30,000 per month on average. This year, that average dropped to just 4,000 new jobs per month.
“Millennials haven’t seen the same benefits in the labor, housing, and stock markets that baby boomers and others have enjoyed over the last year,” Plache says. “As a result, younger Americans across all income levels have had trouble pulling together the financial motivation to buy a new car.”
Plache says that the car sales decline is also a result of a slowed housing market. While 1.4 million new households formed per month in 2012, that number dipped to 500,000 this year.
“Young adults living at home with parents or with roommates typically have less need for their own cars because they can share them with other members of their households,” Plache says. “But young adults living on their own are more likely to need their own cars — and they’re more likely to be able to afford them.”
Despite the decrease in car purchases, Plache expects to see a sales revival within this age group in 2014 as the U.S. economy is expected to continue to expand at a moderate pace. “Even with their decreased share of overall sales this year, Millennials did not slack off on buying luxury and sports cars. These Millennial buying choices suggest an interest in cars that will translate into more purchases when economic conditions allow, just as in 2012,” she says.
In another study, Honeywell Turbo Technologies in Plymouth released survey results showing that 70 percent of Americans have never driven a diesel-powered vehicle. However, 59 percent adults and 56 percent of Millenials said they believe running diesel fuel is more efficient than gasoline.
The company predicts that diesel and gasoline turbo engines will account for about 20 to 25 percent of new vehicle sales in the U.S. by 2018. “Turbocharged diesel engines have an opportunity to make an impact with today’s younger car buyers who understand and even prioritize the fuel economy advantages of the technology, but have not yet been able to drive one,” says Terrence Hahn, president and CEO of Honeywell.