The financial crisis temporarily crippled millennials’ futures, just as many were graduating with lots of student loan debt into a job market that wasn’t creating jobs.
The dire situation coincided with a meltdown of the auto industry in 2009, when annual sales in the US fell from a pre-recession peak of about 17 million to a harrowing 10 million.
Just when carmakers needed young people to buy cars, young people were in no position to take the plunge — understandably, as no jobs meant no credit, and without credit it’s nearly impossible for first-timers to obtain a set of wheels.
This set off a frenzy of speculation that a permanent behavioural shift was underway, and that millennials we form the vanguard of a “de-ownership” trend. A certain amount of fear gripped the industry, which was anything but confident that sales would rebound to a record 17.5 million in 2015.
But along with the prediction that Americans would never buy SUVs again, the theory that millennials would stick to skateboards, bikes, mass transit, and feet has turned out to be unsupportable.
Millennials — especially the oldest ones — are these days buying cars in big numbers. They just had a late start.
Now the largest generation in the U.S., millennials bought 4 million cars and trucks in the U.S. last year, second only to the baby boomers, according to J.D. Power’s Power Information Network, which defines millennials as those between 21 and 38 in 2015. Millennials’ share of the new car market jumped to 28 per cent. In the country’s biggest car market, California, millennials outpaced boomers for the first time.
Too much grim prognosticating about millennial car-buying habits was driven by impressions draw from studying members of the generation who live in big cities, such as New York and the San Francisco Bay area, where owning a car is an expensive hassle.
Elsewhere, getting a job means buying car — otherwise, you have no way to get to work.
Millennials are also getting older, and as they mature and acquire the necessary resources, they’re starting to get married and start families. This often means moving to the suburbs, buying a house, and taking out a car loan. In the past few years, those cars have often been trucks and SUVs, which now look appealing as gas prices have dropped.
In a happy convergence of factors for car companies, these SUVs are more profitable than the small cars that might have the first ride of a Boomer or Generation Xer.
The auto industry is very pleased the millennials are coming around on carbuying, but of course there’s a twist: millennials are more digitally demanding than previous generations. Baby Boomers were fine with a radio. Millennials want full smartphone functionality.
And now that they’re finally good customers for the car business, expect to see the industry go out of its way to meet their needs.
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