Why millennials continue to fall in love with car leasing
We hear a great deal about the millennial generation and why they matter so much as consumers of everything from coffee to cars. Where four wheels are concerned, the big question troubling car makers and those who supply and fund them has been: are they even interested owning things?
In the US, there has been a 46% jump in leasing by millennials over the last five years, according to Edmunds, and the UK is beginning to follow suit.
But what attracts this generation to leasing?
Millennials have environmental concerns
Following on from their Baby Boomer parents, who are the most affluent and liberated generation ever, millennials have not had it quite so easy. For starters, this younger generation that’s traditionally identified as those born after 1980, have arrived into a world that’s experiencing climate change, global warming and a motor industry working its hardest to mitigate the damage caused by the internal combustion engine in the preceding 90 years or so.
It’s little wonder the millennials have an environmental conscience that is far more developed and sophisticated than anything their peace ‘n’ love parents ever knew. They understand the influence of the car and often want to reduce their carbon impact on the world around them, which means the environmental footprint of their car is of major importance in their decision making.
Newer very often means greener and cleaner.
Millennials crave technology
Other key factors to bear in mind with the millennial generation is they are tech savvy in a way older folks find difficult to understand. This is because the younger generation has grown up with computers and the internet.
It’s normal for them to think a smartphone is merely part of your everyday wardrobe and they expect their car to connect to the the latest technology.
So, they get technology and they want to save the planet, but, there is one other major piece of the jigsaw we have to remember with this group. Just as they were approaching the age where they will have graduated from college or university, or worked to the point of affording to buy a car, we experienced a worldwide recession that made life very difficult for most of us.
On top of the recession that made it harder for this group to find work, many were also saddled with debt from their tertiary education thanks to student loans and fees. For many, owning a house AND a car is out of the question. But they still want a roof over their head and to be mobile.
Millennials value usership over ownership
This is where leasing comes into the equation in a way that previous generations of drivers have taken longer to cotton on to.
Millennials are more used to not owning things. They will pay a monthly subscription for their films, music and smartphone. Many rent the property they live in, and they see nothing wrong in using credit to pay for holidays and other luxuries.
As well as familiarity with the concept of not owning the car outright, this generation places usership above ownership. What that means is they are much keener on getting the product or service that fulfils their needs rather than settling for what they can afford to buy outright. For them, leasing is the perfect solution.
Millennials hate hassle
Rather than just have a car to use, this age bracket also wants none of the traditional hassles of car ownership, such as worrying about servicing and repairs, and selling it on when they want a new car. Leasing is ideally placed to offer these drivers a scheme that lets them choose the car they want and can afford the monthly payment on. During their contract, it further frees them from worrying about any maintenance costs as they can be bundled up in the fixed price.
As for offloading the car, that hurdle is dealt with by the leasing company, so the millennial only has the pleasure of picking what car they want next. What companies must bear in mind, though, is many of this generation have a car because of need rather than want, so the cars they are offered have to meet a wide set of criteria.
Millennials display less loyalty
Like when choosing a smartphone, millennials do not have the loyalty of their parents to one make or model: they will simply choose what they deem to be the best fit for their needs. They also want to be free to switch between manufacturers and service providers, like they do with their energy, or banking.
If they have not been happy with the vehicle, or it doesn't suit their needs, they can hand it back at the end of the contract and are free to go wherever they please.
Coming up fast behind the millennials is Generation Z and, studies show they love cars. In their teens at the moment, Gen Z have been brought up on a diet of Forza Horizon and Top Gear (or streaming The Grand Tour on their tablets), and they will be in a position to drive towards the end of this decade.
The good news for rental and leasing companies and car share scheme providers is Generation Z seem even less interested in ownership of cars, but they want more vehicle autonomy and seamless connectivity. The millennials may be the ones driving the way we fund our cars, but it looks like Gen Z are the ones who will shape the way we drive.