Millennials get labeled a lot of things compared to their more seasoned generations. Studies show they're taking longer to buy homes, waiting longer to get married and approaching transportation in a whole new way.
At first glance, it may appear that millennials are ditching cars more than older generations were at the same age. A recent global consumer survey by Statista shows while 77 percent of Millennials living in apartments use or own a household car as their primary transportation, there are many other methods they use, as well.
While there are new methods popping up including ride-sharing, car-sharing and bike-sharing that previous generations didn't have access to when they were younger, there are still many millennials driving cars.
Overall, the number of millennials driving cars vs. using other modes of transportation compared to previous generations at the same time in their lives is pretty similar. One study by Christopher R. Knittel and Elizabeth Murphy in a National Bureau of Economic Research paper concludes:
“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."
Researchers also note in their findings that millennial life-choices only reduce vehicle ownership by less than 1 percent.
Some millennials may choose to not own cars for environmental sustainability reasons or because they live in urban areas with expensive and scarce parking, as well as excellent public transportation. However, it seems the main underlying reason for those who look at other transportation options are mostly financial.
A March 2019 Forbes article by Jack Nerad cites a 2019 QuoteWizard (a Lending Tree subsidiary that provides insurance quotes) survey that found most millennials who don't have cars are really more concerned about affording it than anything else. Because millennials were hit hard by the Great Recession, many of them are cautious about spending too much and that includes buying cars.
The same QuoteWizard survey found that millennials are spending less on cars, which isn't a surprise if they're worried about their budget. Also, many millennials are facing more student loan debt and rising housing costs, which make an automobile something they just have less money to spend on.
Overall car buying trends show consumers buying more trucks and SUVs, according to Motor Trend. However, millennials are buying more sedans for the affordability. Their top purchases include Honda Accord, Nissan Altima, Honda Civic and Toyota Camry.
Another recent survey by Apartment Guide and Randstad sheds more light on why they may not need a car — most Millennials prefer to live closer to work, which is a key driver when picking a place to live. A staggering 68 percent also consider their environmental impact or carbon footprint when finding a place to live, as well.
That doesn't mean everyone can ditch cars, though. Because city living is often expensive, many must get a roommate (or two) or live further from work because they just can't afford to rent nearby. Almost a quarter of all renters (24 percent) say they can't live as close to work as they'd like to because it costs too much.
While millennials may prefer living close to work and like the perks of city living, such as plentiful restaurants and public transportation, the cost is driving many to smaller cities and even suburban areas.
According to research by the Metropolitan Policy Program at Brookings, the growth rate for most large metropolitan cities is trending downward, growing only at a level of 0.86 percent, the lowest since at least 1990. Smaller metropolitan cities (those below half a million residents) and non-metropolitan areas are both trending up.
In fact, according to William H. Frey, Senior Fellow of the Metropolitan Policy Program at Brookings, “Non-metropolitan counties, in the aggregate, register positive population growth in 2016-2017 for the first time since 2010, and small metropolitan areas — those below half a million population — increased their rate of growth for the third straight year."
While there isn't quite the decline that some initial studies lead us to believe, millennials are clearly approaching cars differently than other generations. Factors like increased finances and where they live can both impact vehicle ownership.
Additionally, increasing options with ride-sharing and more people living with roommates so they can live closer to work may mean that sometimes they just don't need to own a car.
Car ownership isn't going anywhere for now, though, so millennials will have to find other ways to help lessen their environmental impact and stay on top of their budget to make sure they're buying cars that won't hurt their bottom line.
Do you have an idea for a topic you’d like to learn more about?