A new standard for a new generation: leasing and sharing vehicles
More than any other generation before, Millennials are transforming the world. The largest generation – at least in the history of the United States – has taken to the Internet for shopping, learned to move from job to job, and revamped the sharing economy. They no longer look at cars as a symbol of coming of age and independence; quite to the contrary, they perceive owning a vehicle as an expensive burden, notwithstanding increasingly lower prices and outstanding financing opportunities.
Amidst one of the longest periods of continuous car sales growth on record, Millennials are slowly, but steadily veering the automotive industry towards a car leasing and sharing business model. In fact, according to recent data, over 34% of millennials in the United States are leasing vehicles. Led by a legion of consumers aged 35 and under, the number of car leases has doubled since 2011 and reached a milestone of 2.2 million in the first semester of 2016.[1]
Millennials are not an affluent generation and leasing not only costs less than financing a car purchase, but comes with the added bonus of vehicle maintenance and return at the end of the contract.
Moreover, millennials love and thrive with technology. Returning a car every 3-5 years for a new one, means being able to keep abreast of state-of-the-art technological innovation, enjoying greater safety features and experiencing the latest infotainment systems. And a leased vehicle can always be easily forsaken in favour of the growing tide of vehicle sharing opportunities.
To meet the demands and desires of this new generation, the automotive industry has markedly sped up its production cycles, introducing, on average, new features or completely redesigning their models every 3-4 years rather than following the previous 7-8-year cycle.
Automakers, on the other hand, benefit from vehicle leasing by creating consumer brand loyalty and reselling thoroughly certified “pre-owned” vehicles.
And most interestingly, this may be the final transitional phase towards a no longer distant scenario in which self-driving cars are the standard, and thrive in a shared economy.
[1] Data from www.edmunds.com