Millennials are shaping auto industry on increasing market participation and digital savvy
TrueCar, Inc. (NASDAQ: TRUE), the negotiation-free car buying and selling mobile marketplace, projects Millennial-generation consumers will purchase 4.24 million cars and light trucks in 2015, producing $135 billion in total revenue as their impact on the market expands.
Millennials, or people born from approximately 1980 through the late 1990s, are expected to reach around 25 percent of the new vehicle market in 2015, TrueCar projects. The level of unemployment for this generational cohort has also improved, dropping by 12 percent in December 2014 versus a year ago. In addition to falling unemployment, the improving availability of quality jobs coupled with entry into the family life-stage by older Millennials also contribute to this group’s ability to purchase new vehicles.
“Improving economic conditions are shifting the rhetoric around Millennials and car buying,” said John Krafcik, president of TrueCar. “They are the largest growing cohort in the market and saying they don’t like cars simply isn’t true anymore. We know having a car means the same thing to Millennials that it does to other generations: independence and identity.”
In fact, Millennials typically drive more than other generations, averaging an additional 144 miles per month, according to a related survey MTV released this month. Millennials, also referred to as digital natives, are 2.5 times more likely to be early adopters of new technology than older generations, specifically mobile devices.
The average transaction price for new vehicles purchased by Millennials in 2015 should average $31,771, slightly below the overall industry ATP of $32,589, TrueCar projects. Total new light vehicle sales will rise an estimated 2.6 percent to 17 million units.
Millennials were heavily represented on TrueCar’s mobile marketplace in 2014 making up 24.9 percent of buyers and expects to grow this to about a third of buyers in 2015. TrueCar is also attracting Millennial consumers at a more rapid pace than the general market. From 2013 to 2014, TrueCar’s percentage of Millennial buyers increased by 77.8 percent. This outpaced the overall auto market, which saw Millennial participation grow by 50.5 percent.
“TrueCar is in a unique position as our site and mobile application is designed for the Millennial mindset, which demands open, transparent, at-your-fingertip pricing data coupled with mobile accessibility,” said Krafcik. “With enhancements planned for our mobile app and usage already surpassing 50 percent, we are ready to delight the influx of these auto buyers.”
