Young Americans have eased up on buying new cars since the end of 2012, according to a report from auto sales information site Edmunds.com. Through August this year, consumers ages 18 through 34 have made up 11.4% of new vehicle purchases, down from 12.6% in 2012. In 2011, that age group bought 10.8% of new cars in 2011.
Edmunds economists attributed the change to a recovering economy that has disproportionately left young consumers behind, according a news release about the analysis.
Edmunds Chief Economist Lacey Plache pointed to employment numbers: Last year, the economy generated an average of 30,000 new jobs a month for Americans ages 25 to 34. Through August this year, that average is 4,000 new jobs a month.
“Millennials haven’t seen the same benefits in the labor, housing and stock markets that baby boomers and others have enjoyed over the last year,” Plache said in the news release. “As a result, younger Americans across all income levels have had trouble pulling together the financial motivation to buy a new car.”
Buying a new car not only takes a certain amount of disposable income, it also depends on a consumer’s credit profile. Consumers, no matter their age, will get the best interest rates with higher credit scores, which are determined by things like debt payment history and loan diversity. It’s helpful to know your credit scores before you buy a car (you can check them for free using a tool like Credit.com’s Credit Report Card). Consumers who finance new cars tend to have higher credit scores, as well.
While age isn’t a direct tie to credit health, other factors to consider among young consumers, in addition to employment, include student debt burdens and the housing market. About 21 million students attend college each year, and roughly 60% of them take out loans to support their educations, and both statistics have grown significantly during the past decade. Monthly payments toward student loans leave less money for elective spending, like new car payments.
And with more young Americans living at home or with roommates, having a car has become less of a priority. Edmunds.com’s research indicates the low sales among millennials results from economic constraints, rather than a lack of interest.