A cherry red Mustang and a Toyota RAV4 pull up to a stoplight, which is more likely to have the younger driver behind the wheel? Studies show millennials are the ones picking SUVs and family cars over the fast cars these days. There are many reasons for it, such as costs and urbanization, and the auto industry is adjusting to fit those needs. To understand why millennials are choosing modern minivans, first understand who millennials are and how they live.
Millennials and the Economy
Millennials were born in the 80’s and 90’s, and they became of driving age during the start of the Great Recession. As a result, the economy has played a great role in which type of cars young adults choose.
Gas prices peaked at $3.80 a gallon in 2012. Car insurance rates for teens are traditionally now very high. Data from Insurance.com shows that adding a teen to a parent’s policy for a one-car family will cause the bill to increase 44 percent. For a three-car family, these costs skyrocket to a 62 percent increase.
These high costs, combined with few high-paying jobs available, made it impractical for young drivers to think about spending money on a sports car.
Millennials and Urban Areas
The economy has caused many young people to flock to bigger cities in search of jobs. Census data shows that 26 percent of U.S. population growth in 2011, the height of the Great Recession, was in urban areas.
The density of urban areas as well as the increased availability of public transportation has made it easier for people of all ages to leave their cars behind. A survey conducted in 2013 by the Transportation Research Institute at the University of Michigan of 618 people between the ages of 18 and 39 found 22 percent preferred walking or biking, and 17 percent of respondents relied on public transportation.
Millennials and Technology
Technology has changed rapidly over the years, and this has played a huge role in millennial culture pulling away from the classic American car culture, one that valued the automotive machines and their social and economic roles.
Technology has had a huge effect on American car culture. People are spending more time indoors connecting with friends through social media or getting entertainment from other online platforms. Nielsen’s data shows millennials spend an average of six hours per week on social media. And with the rise of video games and in-home video streaming, leaving the home base seems less and less appealing.
Millennials and Shopping
Data from CouponFollow shows one third of millennials make the majority of their purchases from a computer, and 16 percent do so from a mobile device. The NPD reports online food orders increased 18 percent over the last year, and it accounts for 1.9 billion foodservice interactions. And Amazon shipped over 5 billion items to Prime customers worldwide in 2017.
Technology has allowed new forms of transportation to rise such as Lyft and Uber. These ride-sharing apps have become many riders’ main method of for daily transportation. In cities such as Detroit, San Francisco and Washington D.C. it is cheaper for most commuters to rely on ride-sharing services instead of their personal cars every week.
Millennials and Family Cars
Millennials born in the 80s and 90s are now at the point in their lives where they are getting settled in their careers and starting a family. According to the National Association of Realtors reports, millennials have been the largest group of homebuyers for the past four years. This could suggest that the generation has moved on from childhood life and is ready to settle down with all the luxuries suburban life can offer.
As a result, Ford economists expect SUV sales to grow to up to 45 percent of all vehicle purchases over the next five years. The company believes in this prediction so much that it announced in April that it would stop selling most sedan models in the U.S. to shift to SUVs and trucks.
Ford is not the only auto manufacturer preparing for a millennial family car boom. Fiat Chrysler made a similar decision in 2016 to cut its Dodge Dart and Chrysler 200 for trucks and SUVs. Mitsubishi says its next Lancer will go from a sedan to a hybrid crossover, and Subaru is planning to unveil a new hybrid and SUV. Toyota North America sales chief Jack Hollis estimates 70 percent of the car market will soon be completely dedicated to trucks and SUVs.
Overall, millennials are more practical spenders and they look for quality over flashy appearances. When they do spend money, experiences often come before new toys. And these toys are often the flashy cars that once dominated the car culture of America past. They rely heavily on technology, comfort, and safety features for their growing families, pushing the SUV into the millennials’ forefront.
Lexi Carr is a blogger based out of Arizona. When she’s not driving safely, she is traveling with her pets and family across the country visiting every state and writing about it.