Some Gen Y-ers -- generally those born between the early 1980s and early 2000s -- are putting the brakes on car ownership.
The decision not to buy a car -- once a rite of passage for young adults -- is being driven by factors including the cost and impact on the environment. For some Gen Y-ers, particularly individuals living in urban settings, or with easy access to public transportation or car-sharing services such as Zipcar, going without wheels is a better way of life.
"Until you have a car, I guess you don't know what you're missing by not having one," says Jack Nerad, vice president, executive editorial director and executive market analyst for Kelley Blue Book.
Many Gen Y-ers are getting out from behind the wheel and walking, taking public transit or hitching rides with friends instead of buying a car. According to Oregon-based CNW Marketing Research, which provides data about the automotive industry, U.S. adults aged between 21 and 34 bought 27 percent of all new vehicles sold in 2010, down from a high of 38 percent in 1985.
Generation Y, comprised of about 80 million Americans, also appears to be less enthusiastic about cars and particular brands of automobiles than their parents and grandparents, says author Lauren Fix, known as The Car Coach.
"Cars no longer have that same connection," Fix says.
3 pros of owning a car
Car owners can get out whenever and go wherever they please without having to rely on public transportation or someone to give them a ride. The freedom a car affords could outweigh any cons, Fix says.
The freedom of car ownership also allows people to explore different portions of a city or community and to live farther away from work, Nerad says.
"I like living where I live and working where I work," Nerad says, who commutes 44 miles each way to his job in California.
2. Demonstrating responsibility.
Owning a car could influence other major purchases, such as a home, by demonstrating that you can take out a loan and make regular payments. "It does indicate to a potential lender how reliable you are in paying back money," Nerad says.
Fix adds that owning a car requires individuals to be responsible and disciplined when it comes to car maintenance. Car owners also are responsible for ensuring their auto insurance, tag and license don't expire.
Errands such as picking up dry cleaning and stopping by a hardware store on a Saturday morning, could take twice or three times as long if individuals have to rely on public transportation, Nerad says.
3 Cons of Owning a Car
The purchase price of a vehicle, particularly a new vehicle, can be daunting. In general, cars have become expensive, Nerad says. The average purchase price of cars, sport utility vehicles, and vans and trucks (seating 12 people or less) in the U.S. was $31,663 in May 2013. This is up $269 from May 2012, according to Kelley Blue Book. Nerad adds that it's possible to recoup some of the cost of owning a car when you resell the vehicle.
Some Gen Y-ers may be more concerned about paying for food, shelter, health care and other essentials before purchasing a vehicle. They're cutting corners to provide for themselves and for their kids, if they have families, Fix says.
Other financial costs include auto insurance, maintenance and fuel. If a person lives or work in a big city, regular vehicle costs can include parking. For example, some New York City lots charge vehicle owners $350 a month to park, Fix says.
The idea of owning a car can be painted in a negative way, especially if individuals are concerned about pollution and living an environmentally friendly lifestyle, Nerad says. Many Gen Y-ers feel that if they don’t use a car, they are doing something good for the planet.
However, they may be more open to owning an electric or hybrid car.
In an opinion column published in June 2013 in USA Today, Dan Becker and James Gerstenzang of the Washington, D.C.-based Safe Climate Campaign, which fights global warming, wrote:
“For decades, the industry has pushed gas-guzzling trucks and cars sporting antiquated engineering but ever-more cup holders. No doubt some of the bus-and-bike-riding Millennials will over time buy cars. But if Detroit wants to reach them, it must try something better than adding Bluetooth to its behemoths. It should ramp up production of clean cars.”
3. The sales process.
Walking into an automobile dealership and being inundated by eager, aggressive salespeople can turn off some Gen Y buyers. The idea of having to apply for credit to get a loan can be overwhelming, and a new frontier that doesn't appeal to some Gen Y-ers seeking to live debt-free or are already burdened with existing debt.