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Gen Z buys cars earlier than older consumers.

Gen Z’s Interest in Autos Accelerates Sales

Young buyers have strong credit, eagerness to buy autos.

Generation Z — the generation after millennials   — appear to be plenty interested in car ownership in their early 20s, more so than the millennials were at a similar age, based on the results of the “Solving for Gen Z” study of actual credit usage by credit bureau TransUnion.

The recent study finds that Gen Z, born after 1995 are more likely than millennials to have an auto loan or lease, comparing credit history for both groups when they are between the ages of 22 and 24. That should be good news for auto dealerships.

“Not only are Gen Z more penetrated by auto credit, but we’re getting them a little bit earlier  than millennials 10 years ago,” Michele Raneri, vice president and head of U.S. research and consulting at TransUnion, tells WardsAuto.

The study finds 30% of Gen Z members who were 22 to 24 years old in 2023 had auto loans. That compares with only 25% of millennials who had auto loans when they were 22 to 24 years old back in Q4 2013. TransUnion defines millennials as those born between 1980 to 1994.

Young Gen Z members also have better credit scores, on average, at 22 to 24 than similarly aged millennials: 675 for Gen Z vs. 657 for millennials. That’s part of an overall trend across the industry toward higher credit scores. Gen Z also has higher delinquencies in the first 24 months of a loan than millennials of the same age.

Remember, there was a lot of concern in the auto industry a generation ago when it seemed millennials “weren’t interested” in car ownership or even driving — supposedly because they were more interested in video games and big-screen TVs.

Baby boomers, on the other hand, couldn’t wait to get a car and start driving the moment they were old enough, researchers say.

In retrospect, analysts say millennials postponed, but didn’t skip, a lot of milestones because of the Great Recession — like first car, first baby, first home. It was because they couldn’t afford those things when preceding generations could, and not necessarily because society no longer valued those things.

 

 

TAGS: Retail
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