The sudden, sharp drop in interest in car ownership has had the global car industry spooked for more than a decade.
The lack of desire for vehicle ownership amongst millennials (as ill-defined a concept of a group of people as any you’ll find) has become so ingrained as to be axiomatic.
Car makers have been planning for some time now to phase away from actually selling anyone a car that they’ll actually own, to becoming service and mobility providers whose electronic apps will be as important to the bottom line as any physical vehicle.
Except maybe that won’t happen.
While the car makers have certainly been planning on this sequence of events unfolding, new research suggests that it may just not be the case.
It may be, instead, that millennials’ lack of car buying has simply been down to them not having enough access to ready cash; that the effects of the post-2008 crash and depression have been more long-lasting than originally thought.
Life choices
Research carried out by MIT's Christopher R Knittel and Elizabeth Murphy from Genser Energy, at the US National Bureau of Economic Research has found that actually millennials would buy more cars if only they could afford them.
“We find little difference in preferences for vehicle ownership between millennials and prior generations once we control for confounding variables. In contrast to the anecdotes, we find higher usage in terms of vehicle miles travelled compared to baby boomers”, says the report.
The report finds that the paths that millennials’ lives follow actually have very little overall effect on their chances of wanting to buy a car.
The report does seem to show that when members of this generation can afford to, they actually buy more vehicles per household
While they do tend to live in more urban areas – which usually depresses the need or desire to own a car, or nullifies the convenience of owning one – and are less likely to marry before the age of 35, the fact that their family sizes when married tends to be larger than those of the previous generation ups the need to buy and own a car.
Overall, the study found that: “These other choices have a small effect on vehicle ownership, reducing the number of vehicles per household by less than one percent.”
The report’s authors admit that data for millennials and their preferences is still rather incomplete, as the oldest among that generation are only now approaching 40-years-old.
Nevertheless, the report does seem to show that when members of this generation can afford to, they actually buy more vehicles per household than the preceding generation.
“We find that although a simple comparison of average ownership and use would suggest a difference, once one controls for confounding variables there is no evidence of a difference” says the report.
“While we find that millennials are altering life-choices that affect vehicle ownership, the net effect of these endogenous choices is to reduce vehicle ownership by less than one percent.
“We can statistically rule out effects larger than 2 per cent.”
