Young Adult Car Buying Trends
Car buying and ownership trends among young adults include less young adults are buying cars; more young adults are gravitating towards less expensive, smaller vehicles, and more young adults are purchasing insurance policies online.
CAR-BUYING, OWNERSHIP, AND CAR INSURANCE TRENDS
1. LESS YOUNG ADULTS ARE BUYING CARS
- The trend can be attributed to the fact that for young adults, owning a car is no longer the status symbol and luxury it once was.
- They seem to be buying cars more out of necessity than a desire to the extent that 43% of them see owning a car as a hassle.
- Young adults are also mostly financially constrained due to student debt and the fact that they are potentially starting their careers in a less stable job environment. This leads them to buy less.
- The majority of them (78%) view owning a car as being difficult due to the high cost of gas and maintenance.
- With less young adults buying cars, the impact on car insurance sales from this demographic is that fewer insurance policies are being sold.
2. MORE YOUNG ADULTS ARE GRAVITATING TOWARDS LESS EXPENSIVE, SMALLER VEHICLES
- Young adults are moving more and more towards buying less expensive and more practical cars.
- A factor contributing to this trend is the crushing student loan debt young adults are grappling with. Studies show that young adults on average have a high amount of student loan debt and this significantly impacts their buying power.
- In the past, owning an expensive, good-looking car was a big life goal because it was easier to do so, with lower costs and a more stable economy.
- The most popular cars bought by young adults include the Honda Accord, the Nissan Altima, the Honda Civic, and the Toyota Camry, which are all practical vehicles.
- The impact on car insurance sales of this demographic is that more young adults are opting for cheaper solutions when it comes to deciding on insurance policies.
3. MORE YOUNG ADULTS ARE OPTING FOR CAR "ACCESS" INSTEAD OF CAR OWNERSHIP
- More young adults are quickly adopting car sharing as a mainstream transportation solution.
- This trend can be attributed to more young adults having more access to public transportation options than previous generations. This is especially true because more young adults are living in large metro areas and cities, where public transportation is abundant.
- With access to public transportation, most young adults don’t feel the need to buy a car, especially due to concerns about the total cost of vehicle ownership and the perceived advantages of car-sharing services.
- The impact on the car insurance sales of this demographic is that it leads to a decline in the sales of car insurance policies.
4. YOUNG ADULTS BUY USED AND PRACTICAL CARS INSTEAD OF NEW AND FLASHY ONES
- The trend shows that customers in the 18-34 age bracket are more likely to buy used cars, while new cars are mostly purchased by buyers age 40 years and above.
- This trend can be attributed to the cost factor and the greater need for a car that maximizes on reliability, affordability, and practicality rather than being luxurious.
- The impact on car insurance sales from this demographic is that more young adults are opting for cheaper solutions when it comes to deciding on insurance policies.
5. MORE YOUNG ADULTS ARE PURCHASING INSURANCE POLICIES ONLINE
- According to a Gallup Panel, young adults who fall within the millennials bracket, are two times more likely (27% vs. 11%) to purchase an insurance policy online than other generations.
- This trend can be attributed to the fact that most young adults are tech-dependent/a tech-driven group. They grew up in the technology age with computers and the internet readily available giving them both convenience and opportunity.
- NBC Universal Media shows that an average millennial may spend as much as 18 hours a day on any type of digital media while touching their smartphone at least 45 times each day.
- The impact on car insurance sales from this demographic is that it compels the insurance companies to find new ways to engage with and improve the user experience among young adults, to boost future car insurance sales growth.