Young Buyers are Purchasing Fewer New Cars, and Who Can Blame Them? | Carscoops

      Rising monthly car payments and shifting views on vehicle ownership are contributing to a decline in registrations among the 18-34 age group.

      The percentage of new cars purchased by those aged 18-34 has dropped below 10%. Four years ago, this age group accounted for 12% of new vehicle purchases. Increasingly, younger buyers are opting for older cars or utilizing ride-sharing services.

      The next time you encounter an advertisement for a new car, observe the youthful models and actors used to promote the concept of ownership. They typically represent young couples or families. However, the concerning reality for car manufacturers is the decrease in young people acquiring new vehicles.

      A study by S&P Global Mobility revealed that the proportion of new vehicles bought by the 18-34 age group has decreased from 12% in Q1 2021 to under 10% in the most recent quarters. Meanwhile, the percentage of new car purchases by those over 55 in America has increased from 45% to nearly 49% during the same timeframe.

      This means older buyers—who previously swapped positions with the 35-54 age group—now dominate the market, purchasing nearly half of all new cars in America, despite being featured less in marketing campaigns than the other age groups.

      Affordability poses a significant challenge for younger potential car buyers. S&P Global Mobility reports that monthly car payments have surged by 30% over the past four years, with nearly one in five new cars costing over $1,000 each month. This is a hefty sum for a young individual or family, especially as this demographic is also facing the return of student loan payments that had been suspended during the Covid-19 pandemic.

      These financial challenges have directed younger buyers towards used cars, which typically have lower monthly payments and insurance costs. However, some are completely opting out of car ownership, instead choosing subscription services, car-sharing platforms, or relying on ride-hailing and public transport, which often suit urban living better.

      It is already recognized by some automakers that the concept of car ownership may eventually diminish, suggesting that younger buyers refraining from purchasing cars could be early adopters of a broader trend that older generations—traditionally the last to embrace new ideas—might later follow.

      Despite the decrease in registrations, the 18-34 demographic still purchased 1.1 million new cars in the year leading up to March. Their preferred choice was significantly the compact utility segment, followed by traditional compacts. However, with automakers like Ford and VW nearing the release of budget electric vehicles, we may see these models contributing to sales figures and possibly an increase in purchases among the 18-34 age group.