Millennials bought more cars in 2012 than 2013. Heres why
After years of stagnating auto sales to buyers aged 18 to 34, sales picked up for millennials in 2012. But they slowed again in 2013, erasing the gains of the previous year. Edmunds.coms chief economist Lacy Plache explains why.
First, the job market declined for younger consumers this year but picked up for older buyers. Young people had a hard time finding jobs during the Great Recession, from 2007 to 2011. As their job prospects improved in 2012, they bought more cars. But their employment and their car buying have slowed this year.
Second, related both to millennials employment and car buying habits, household formation for young people surged in 2012 but slowed in 2013. With so many young consumers still living with their parents or with roommates, they had less need for new wheels.
Third, for the rest of the population, the wealth effect from an improved stock market and rising home prices helped spur car sales. But younger consumers who are not yet in lucrative jobs or homes of their own cant share in the wealth effect.
Plaches analysis is another reminder that millennials are not out of the auto market forever just until they get a good job and the things that go with it.Download Bulletin PDF