22.5% of New Car/Truck Shoppers Aged 25-34
Millennials are more likely to lease vehicles than older Americans, Edmunds.com reports in “Millennials More Likely to Lease Vehicles than Older Americans, Reports Edmunds.com.” Analysis finds that the younger generation increasingly turns to leasing to get more car for their dollars. According to Edmunds’ analysis of car registration data provided by Polk, leasing has accounted for 28.9% of all new car purchases by millennials (ages 18-34) in 2015.
Lexus, Jaguar, Cadillac and Acura are among the top 10 brands leased by millennial buyers, along with other pricey cars like Subaru, Mini and Buick, according to Edmunds.com. The 18- to 34-year-old group leases 60% of their luxury cars compared with about 50% for other buyers, Edmunds says.
Millennials typically prefer to spend $300 max per month on a car and put down no more than $3,000, according to Edmunds. “Leasing is the only way to get the car they really want and allows the tech-hungry cohort to get a new vehicle every two or three years,” Automotive News reported in “Millennials are developing parents’ taste for Jaguars, Cadillacs.”
ÛÏIf they see a chance to get into a nicer car while staying within their budget, theyÛªre likely to explore that opportunity,Û said Jessica Caldwell, director of industry analysis at Edmunds. ÛÏIn most cases, leasing opens the door to the bells and whistles that they couldnÛªt otherwise afford.Û
Of the 10 brands they lease the most, only Scion and Ram are mainstream, Caldwell said.
“Plus, millennials are used to upgrading their smartphones every couple of years and expect the same for their cars. It makes no sense to them to buy a car and hang on to it — even if doing so is cheaper in the long run,” according to Automotive News.
ÛÏLeasing lends itself to staying up to date with the latest technology,Û said Kevin Tynan, a Bloomberg Intelligence analyst.
Millennial car buyers opt to lease their vehicles at a higher rate than the overall car buying population, according to a new analysis from car-buying platform Edmunds.com. The finding suggests that millennials are more willing than older adults to sacrifice the long-term financial benefits of car ownership to get into bigger or more luxurious vehicles that are typically more affordable through leasing.
According to Edmunds’ analysis of car registration data provided by Polk, leasing has accounted for 28.9% of all new car purchases by Millennials (age 18-34) in 2015. The percentage exceeds the industry-wide lease penetration rate of 26.7%, and reflects a 46% increase in leasing by Millennials over the past 5 years. By comparison, the share of leasing among all car shoppers has increased 41.7% during that period.
“Most Millennials understand and accept that they’re on a tight budget and that they need to stick to it,” said Edmunds.com Director of Industry Analysis Jessica Caldwell. “But it doesn’t mean that their financial constraints limit them only to the most basic vehicles to get from Point A to Point B. If they see a chance to get into a nicer car while staying within their budget, they’re likely to explore that opportunity. In most cases, leasing opens the door to the bells and whistles that they couldn’t otherwise afford.”
There is a dramatic difference between what Millennial shoppers can afford when they choose to lease compared to when they choose to buy. According to a survey of Millennials conducted in June by Edmunds and Morpace Inc., a global market research firm with a large practice in the automotive sector, a majority of respondents (57%) said that they are willing to put no more than $2,999 down on a new car purchase, and a similar majority (54.9%) said that they are willing to pay no more than $299 per month. By inputting those budgets into Edmunds’ “How Much Car Can I Afford?” Calculator, shoppers who choose to finance their purchase are generally limited to vehicles priced at under $20,000. On the other hand, shoppers who are willing to lease can apply the same upfront and monthly budget toward a vehicle priced as high as $35,000.
Other takeaways from Edmunds’ analysis of Millennial leasing behaviors include:
Leasing is especially popular among Millennials living in some Midwest cities. In the most dramatic example, Edmunds found that Millennials in the Grand Rapids, Michigan market are 33% more likely to lease their new car purchase than the city’s general car shopping population. Other top-50 markets where Millennials are more likely to lease are Minneapolis-St. Paul (30.5% more likely) and Milwaukee (26.4% more likely).
Millennials tend to gravitate toward leasing certain brands compared to the overall car buying population. Edmunds found that Millennials who acquire a new Ram truck, for example, are 30% more likely to lease it than the general population. Other top brands that Millennials are more likely to lease include GMC (26.1% more likely) and Lexus (23.9% more likely).
The Millennial leasing rate outpaces that of the total population in every one of Edmunds’ 24 vehicle segments except for one: compact cars. An estimated 25.5% of all new compact cars registered by Millennials this year were leased, compared to 26.2% of new compact cars registered by the general population.
With more shoppers opting to lease than ever before, it’s critical that they understand all of the elements of the deal. Edmunds.com provides step-by-step guidance for securing a great lease deal at http://www.edmunds.com/car-leasing/10-steps-to-leasing-a-new-car.html.
AudienceSCAN found that 22.5% of the New Car/Truck-Shopping audience is between the ages of 25 and 34; 12% are aged 18-24. They are 93% more likely than average consumers to drive luxury cars. 26% will go to auto shows in 2015, and 14% will attend holiday/Christmas expos, so get your dealers there! Tweak their tweets too: 41% of vehicle shoppers were on Twitter in the past 30 days. TV is tops ÛÒ 46% took action in the past month after seeing a commercial on television (over-the-air, online, mobile or tablet).
AudienceSCAN data is available as part of a subscription to AdMall for Agencies. Media companies can access AudienceSCAN data through the Audience Intelligence Reports inåÊAdMall.