Turns Out Millennials Won’t Kill the Car
Expert says young Canadians aren’t as ‘car crazy’ as previous generations, but they still drive as much.
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If you go back a few years, there was a lot of hype around the fact that millennials weren’t “in love” with cars the way that boomers and other generations were. Surveys and focus groups showcased this younger cohort’s indifferent—or righteous—attitude towards vehicle ownership. The auto industry was also very anxious to understand what that meant for their ability to make money.
Turns out, a lot of that worrying was for nothing. According to DesRosiers Automotive Consultants, car ownership rates across Canada are soaring (unlike the US, where they’ve tapered off in recent years) and there’s an increase in the number of young people (aged 35 and under) who are getting their driver’s licence. Most everyone is driving more cars longer distances. So millennials probably won’t kill the car.
George Iny is the executive director of the Automobile Protection Agency, a consumer advocacy group. He’s spent most of his adult life studying vehicle trends and he says there’s a big mismatch between public perception and what the data shows. “It’s one of those situations where we think we’re green, we think we’re more progressive—if you call that being progressive—than we really are. How we fashion ourselves or style ourselves is somehow not consistent with reality,” he told VICE.
So how did everyone get onboard with the millennials-as-car-killers thesis? Iny says there was a kind of soft spot after the recession where likely there were fewer young people coming into dealerships, and lots of evidence that younger Canadians weren’t infatuated with cars like their parents and grandparents were. Sure, millennials were less able to afford cars because after graduation they were struggling with a combination of record levels of student debt, precarious employment and a shortage of affordable housing in most major cities.
But all that means is that millennials (and Gen Z) were and are waiting longer to get a car, especially in major urban centres where they have other choices like public transit, car sharing, rentals, plus services like Uber and Lyft (Lyft went public this week and has been valued at about $24.3 billion CAD. Uber’s IPO is planned for later this month so it looks like these companies are here to stay).
In downtown Toronto, Vancouver, and Montreal, young millennials are making do with all these other options—but not forever. Iny says that typically, by their late 20s or early 30s, when and if they make it into a stable job (or have a few go-to clients or steady gigs), they’re ready to purchase a vehicle. That delayed entry means spending more money on a purchase (or lease) and that’s showing up in strong luxury car sales. “They’re coming into the market for the first time later, and they’re not necessarily buying eight-year-old beat-up Honda Civics like people did in the 90s. They want something nicer. They might lease a small Mercedes or an Audi.”
For young people outside of these core centres (and that includes the suburbs of these same cities), driving and purchasing habits aren’t that different from generations past. The way vehicles are acquired is different thanks to years of historically low borrowing rates which have reduced monthly payments, so leasing and financing are more popular than outright purchases (plus most people probably can’t afford to part with a huge chunk of cash in one payment).
A survey out today by Angus Reid for car-sharing platform Turo shows how reliant Canadians are on their cars. More than three-quarters of respondents say they think it would be impossible for them not to have a car. That number jumps to 89 percent in rural areas, which highlights the lack of alternative options including public transit.
According to Iny, housing affordability plays a big part in our reliance on having our own vehicles. Neighbourhoods where most of the population can afford to live comfortably require a car, truck or SUV. “When you start a family, when you have kids, daycare, shopping, groceries—that kind of person would immediately find themselves in a vehicle. That’s what the trend is showing.”
He draws the example of a young millennial family in a Calgary suburb. Even if they take public transit to work, they still need a vehicle to run errands or to get away to the mountains on the weekend. Though there are some bike and pedestrian-friendly pockets in the city, most of it is designed for people with cars. And that’s the scenario across much of the country.
As for that whole notion that millennials have a hate-on for cars, that may not be entirely true. It is worth noting that 43 percent of respondents in the Turo/Angus Reid survey expressed concern over a car’s impact on the environment (a large number of these respondents were 18-34 year-olds and in Quebec, specifically). And despite the fact that millennials have the lowest car ownership rates at 68 percent, they are also the cohort that is most interested in owning a car in the future. So they’re not ready to quit the dream.
That’s why the rise of services like Uber, Lyft, ZipCar is happening while the auto industry is also expanding. “Because you have these new alternatives, doesn’t mean that car ownership is going down. Both are growing at the same time,” Iny says. “Traffic is getting worse, not better. That can’t be because millennials are riding around on bicycles all the time.”
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