It’s no secret that there are fewer younger vehicle buyers in the market today than a generation ago. We touched on that a little in last week’s e-newsletter, including the findings from a study done by the University of Michigan’s Transportation Research Institute which said the number of 20-24 year olds with driver’s licences has dropped from 92 to 79 per cent since 1983.
However, at the recent Center for Automotive Research Management Briefing Seminars in Traverse City, Mich., General Motors’ chief economist, Mustafa Mohatarem said that disinterest in new cars by younger people is actually hard to prove.
He said that perhaps it’s not so much a lack of interest but rather a lack of ability for young people to purchase a car, particularly a new one. Mohatarem cites high levels of school and college debt, low-paying jobs, higher rates of unemployment and reluctance among many financial institutions to lend as major factors why younger people aren’t able to purchase cars. He also says that as consumers demand more content and features in their vehicles, the cost of buying a car is also increasing and for young people especially, high insurance rates also make vehicle ownership a challenging proposition.
Mohatarem also notes that although it is true that young people are buying cars at a lower rate than in the past, the drop doesn’t represent a permanent withdrawal of these people from the market, rather it represents a delay, until they’re able to pay off student debt, establish their careers and have more income available to make vehicle purchases. “The good news is if I look at the demographics of people in their 30s, the number of them getting licenses and buying cars is back to very normal levels.”
To listen to a podcast of Mustafa Mohatarem’s comments, click the following link: http://bcove.me/a5wp8t32
