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Millennials, It’s Your Fault New Car Sales Are Sliding…Apparently

The sharp drop in new car sales throughout 2019 has had no shortage of publicity, particularly now that 18 consecutive months of declining figures have come through. Over that time we’ve heard from experts as to a variety of factors that have contributed to the rut.

From political uncertainty before this year’s election, to a tightening in lending regulations, a weakening economy led by subdued house prices, the effects of a drought, and believe it or not vehicle shipments contaminated by little bugs! Now you can add another ‘explanation’ to the list because millennials, it’s your fault new car sales are sliding…apparently.

 

The underlying trends

You see, the shifting trends among millennials are pointing to a change in views towards car ownership. Younger Australians are holding onto their first vehicle for a longer period of time, or otherwise putting their driver’s licence on the back burner. There is testimony from some industry insiders to suggest that millennials are less comfortable with the idea of a loan than previous generations given a tendency to spend more to stay up to date with the latest technology or to fuel travel and entertainment aspirations.

The prompts are largely coming about through the influence of technology, including the role it is playing on behavioural patterns. First and foremost, the rise of apps like Uber and Ola have reduced dependency on individual vehicle ownership, instead promoting the benefits of a flexible ride-sharing fleet. Online food and grocery services follow the same notion, where a few simple touches on a mobile phone are enough to avoid making that trip to the supermarket.

At the same time, we’re also seeing far greater levels of urban consolidation take place in our major cities. Given the significant rise in house prices since the end of the GFC, many millennials are forgoing the Australian dream to own a home. An increasingly popular choice of action is to rent in highly desirable locations, which typically translates to inner city living or convenient public transport links nearby – both reducing dependency on vehicle ownership.

Finally, vehicle subscription services and peer-to-peer car sharing are becoming more commonplace in this demographic segment as well. A variety of companies have latched onto this trend, allowing anyone to borrow a car from a friendly stranger in their neighbourhood. Who would have thought it would be possible all those years ago?

 

Is there more to it than meets the eye?

Notwithstanding the trends that are taking place, the conversation has really only started to emerge in recent months. Look a little further back however, and what you realise is that new car sales were coming off an all-time high. Quite frankly, a level that some would argue may well turn out to be a short-term peak, or an otherwise unsustainable level once evidence of a slowing economy emerged. These trends have been occurring for some time now, so should have been observed earlier on sales data.

Furthermore, many of these trends are being attributed to millennials, but they sure as heck aren’t the only ones nurturing such changes. Those who have been brought up through these technological and societal changes become an easy target to point the finger at for ‘leading the way’ so to speak, but if this was really at the heart of the matter, then a range of buying incentives should suffice among other demographics to offset this decline.

But the facts remain, we’re seeing high levels of population growth, the lowest interest rates on record, and vehicle prices as affordable as they’ve ever been before. If those initiatives aren’t getting other buyers into the market, to offset a supposed wane in interest among millennials, where does the fault really lie?

 

One comment

  1. John Aquilina says:

    If manufacturers actually built cars people wanted that may help sales.
    If cars were honestly engineered to provide a trouble-free life, that would help sales.
    If manufacturers built low maintenance EVs (without ANY scheduled service intervals) sold them direct to customers to avoid huge dealership service and sales mark ups, then people may return.

    October 25th, 2019 at 10:56 pm

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