Young People Are Buying Fewer New Cars, And Who Can Blame Them?

The next time you see an advert for a new car, take a look at the models and actors being used to sell you the idea of ownership. They’re almost always young, either young couples or young families. But the worrying reality for automakers is that the number of young people buying new cars is on the slide.

A study by S&P Global Mobility found the share of new vehicles snapped up by those in the 18-34 age group has fallen from 12 percent in Q1 2021 to below 10 percent in the most recent to quarters. In contrast, the share going to the over 55s in America has grown from 45 percent to almost 49 percent in the same period.

Related: Record Number Of Americans Are Falling Behind On Their Car Loans

That means oldies – who in the past have traded positions with the 35-54s, but are now firmly out in front – buy virtually half of America’s new cars, though they feature far less in marketing material than either of the other two groups.

Affordability is a big problem for younger would-be car buyers. S&PGM says monthly car payments have grown by 30 percent in the past four years and almost one in five new cars costs more than $1,000 every month. That’s a big ask for a young person or family, particularly as the demographic is also burdened with the resumption of student loan payments, which had been paused since Covid-19 times.

These financial pressures have pushed younger buyers towards used cars that have lower monthly purchase and insurance costs. But some are opting out of car ownership altogether, either choosing subscription-type services, using car-sharing platforms or simple relying on ride-hailing and public transport that often make far more sense in a busy city environment.

We already know some automakers think the idea of car ownership will eventually fade away, so perhaps these younger buyers who’d decided not to buy at all are simply early adopters of a wider trend that the older age group – usually the last to jump on trends – will eventually jump on further down the line.

Despite the decline in registrations, the 18-34 demographic still bought 1.1 million new cars in the 12 months to March. Their top choice by far was the compact utility segment, followed by the traditional compact, though maybe when automakers like Ford and VW finally release the budget EVs they’re working on we’ll see those on the scoreboard too, and potentially an uptick in 18-34 sales.

Lead image Mazda