Millennials look set to lead a car ownership boom across the globe, representing 45 per cent of all first-time car owners, according to a new report, with most intending to buy a petrol or diesel model.
According to the EY Mobility Consumer Index, those aged between 24 and 39 will drive car ownership worldwide, fuelled by the Covid-19 pandemic.
Covid has changed people’s attitudes to car ownership, the report found, with nearly a third (31 per cent) of non-car owners reporting an intention to buy a car in the next six months,with the impact of the pandemic being a top reason for doing so.
More than two-thirds of millennial non-car owners seeking a new car intend to buy a petrol or diesel model, the report found – an “unexpected surge”. Less than a quarter (23 per cent)plan to buy a hybrid and just 6 per cent an electric vehicle (EV).
Millennials are more likely to buy a used car than a new one
In Ireland the overall trend in the new-car market is towards lower-emission vehicles. “Despite the fall in new cars sales, both electric vehicles and PHEVS [plug-in hybrid electric vehicles] are well ahead of last year, and with more models and supply coming on stream as the year progresses, it is anticipated that this growth will continue,” said Brian Cooke, director general of the Society of the Irish Motor Industry.
Millennials, however, are more likely to buy a used car than a new one and, as yet, there is no real used-car EV market.
Recent changes to the Sustainable Energy Authority Ireland’s Electric Vehicle Purchase Scheme will see grants for EVs continue at a rate of €5000, but from July 1st, those for PHEVs will halve to €2,500.
“The second-hand market is still relatively new as adoption grows. I think we’re past the maven or ‘early adopter’ phase and well into the mass adoption phase, but you need a generation of that to happen before there are cars that are cheap enough to compete with old petrol or diesel cars,” said Kevin Dowling from the Irish EV Owners Association.
“The second part of that is that the cost is front-loaded – it’s super cheap and easy to run an EV but for a younger person, they don’t see the car as a longer-term investment yet, so even though it has cheaper tax, and electricity is super cheap or even free if you run off solar, the initial cost is the important moment-in-time.”
Infrastructure
The second barrier to millennials is infrastructural. “If you own a house it’s easy to stick a charger on it for the car parked in the drive. If you live in an apartment or rent, you’re unlikely to get a willing landlord to do that kind of work. ESB and others are doing trojan work to build more infrastructure inside cities and towns, including a recent project to upgrade the network hardware, but there’s still an issue with getting plots of land, securing EV-only car parking spaces, and a lack of joined-up thinking around EVs from local authorities and Government,” he said.
Price, fuel efficiency and safety are the three most important features to millennials when evaluating vehicles
Where they can afford them, the tech spec appeals to this cohort. “The technological features within the vehicles are important to consumers and in particular millennials who wish to feel connected, including features [such as] integrated GPS or navigation system, Bluetooth, satellite radio and mobile integration,” Mr Dowling said.
But according to a global report, Millennials and Auto Trends, undertaken by Duff & Phelps in 2019 just before the Covid crisis, price, fuel efficiency and safety are the three most important features to millennials when evaluating vehicles.
They also like to buy, rather than be sold to, it seems. “Millennials appear to be confident in performing their own research when car shopping, which speaks to their fluency with the internet and the near-limitless amount of information available to assist them,” the report’s authors said.
They suggest that original equipment manufacturer websites, where buyers can build and price their own car, may in future be more critical for drawing in millennial buyers than dealerships – in which millennials were found to place low reliance.
Marques are aware of this. Volvo has announced its intention to become a fully electric car company globally by 2030 and will launch a completely new family of electric cars in the coming years, all of which will be available online only.
Future development
“I think millennial customers expect a new car to be ready for the future development of electrification but are pragmatic about the fact that the new car they use today will not be the one they’ll be using in 2030. Older customers tend to have more concerns about whether a car today will still be relevant and usable in the 2030s,” said David Thomas, managing director at Volvo Car Ireland.
Buyers already know exactly what they want before contacting a dealership
“Millennials also have high expectations around connectivity and compatibility with their personal technology and expect to be able to upgrade their car to keep pace.They are likely to have a greater openness to ‘use’ rather than ‘ownership’ so subscription-based usage products are likely to feature but we’ve yet to see a wider adoption of this or car-sharing models in Ireland.”
Buyers already know exactly what they want before contacting a dealership, said Cooke. The industry has undertaken significant investment in digital platforms to support them, accelerated by the pandemic.
“However, the key to getting the sale over the line for many is still the driving experience,” said Cooke, who believes that regardless of age group – or car type – “this will continue to form a key part of the final car purchasing decision”.
