HOW ARE MILLENNIALS CHANGING THE TRANSPORTATION LANDSCAPE?
Transportation is a vital part of most of our daily lives. We get in the car or hop on some public transportation to get to work, to school, or the grocery store and back.
As with most things, millennials (people born between 1982 and 2004) and baby boomers (those born between 1946 and 1964) tend to differ in their driving habits. How are these habits changing the way we look at transportation?
What variables tend to affect the driving habits of these two generations?
- Income: Even though the millennial generation has more degrees than the baby boomers, they’re making as much as 20% less than the older generation did at the same stage in their lives.
- Living arrangements: More baby boomers live in single-family homes, while a higher majority of millennials live in their parents’ homes or with roommates.
- Driver’s licenses: Fewer millennials have their driver’s license, with approximately one-quarter of them not bothering to get their license at all. Many cite the rise of services like Uber and Lyft for this change.
- Location: Cities and suburbs are very popular with millennials, mostly because of the availability of public transportation and ride-sharing services.
These variables obviously don’t apply in all locations, but the trends are clear.
Buying your first car is considered a rite of passage, as is buying an expensive luxury car when you finally have the money to afford it. High-end brands like Porsche, Mercedes-Benz, and Jaguar are the favorites of the boomer generation. 56% of Mercedes buyers are boomers, as are a whopping 84% of Porsche Boxster buyers.
Millennials, on the other hand, tend to prefer small sedans and muscle cars. Sedans are practical, often featuring great gas mileage, and muscle cars give these millennials a chance to own their dream cars without breaking the bank. Millennials also tend to spend more time saving up money to purchase their car rather than leasing them. By putting extra money toward a car savings account, a millennial could save up enough money in just two and a half years.
One of the biggest things to consider when purchasing a car today is its impact on the environment. That’s why hybrid and electric cars are becoming so popular. Nearly every car manufacturer has at least one hybrid model and many have fully electric models either available now or coming soon.
Millennials are more interested in buying hybrid cars than those with only gasoline engines. A survey conducted in 2012 found that 60% of millennials would prefer a hybrid over a regular car or truck.
Boomers, on the other hand, are the ones to whom companies are interested in marketing electric cars. Some of the sportier models, like those being sold by Tesla with prices starting at $79,500, are often out of reach for the average millennial.
One of the biggest uses for a car is to commute to work or school. Fewer and fewer millennials are commuting to work by car. Younger millennials are the most likely to use public transportation or walk to work, followed closely by older millennials and even some members of Generation X.
On the other hand, baby boomers are the only generation to commute more — and these numbers will likely continue to climb until the boomer generation starts to retire. As the generation gets older and less able to commute by public transportation, more and more of them will commute by car instead.
Until the last few years, on-demand transportation has existed in one form: the taxi. Applications like Uber and Lyft have started to change that by making it easy to request a ride from your smartphone. All you have to do is put in your location and destination, a time when you’d like to be picked up, and a credit card, and the app takes care of everything else.
This form of transportation is most popular with millennials. A survey completed in 2016 showed that 24% of millennials use app-based transportation, though that number may have risen in the intervening months. Only 7% of baby boomers utilize these applications for transportation, despite the fact that Uber actually wants their generation to become drivers for the company.
A steady income and a good credit score are both essential to purchasing a new car. We’ve already mentioned that the median income for millennials is roughly 20% less than what baby boomers were earning at the same time in their lives, which puts the younger generation at a disadvantage when it comes to purchasing big-ticket items like cars.
Financial experts recommend not spending more than 10% of your gross income on a car, due to additional costs like maintenance and insurance. But that becomes hard to manage when your gross income is only $40,000 a year — it’s nearly impossible to get a good, reliable car for $4,000.
20 years ago, carpools were the most popular way to conserve fuel while still getting to work or school on time. Today, Uber takes the place of these carpools and has even started taking the place of taxis. Millennials will continue to shape the way we buy cars and the way we commute to work, especially in the coming years as the baby boomer generation begins to retire.
Boomers, on the other hand, will continue to stimulate the economy as they reach retirement age and buy their luxury cars and vacation homes.
While millennials and baby boomers will probably never agree on everything, we can all agree that having reliable transportation — whether that transportation comes in the form of a car, a bus, a bike, or an Uber — is an essential part of life. While our driving styles and habits may differ, that one fact will remain the same, at least until someone figures out how to mass-market flying cars that won’t damage the environment.
Until that time comes, we’ll just keep moving forward, no matter how we get there.