Who Needs Uber When You Can Lease In Style?
It seems millennials aren’t abandoning the auto market for Uber – but they are changing it. Millennials, or Generation Y – young people born in the late 90’s – have started a new trend: leasing luxury cars that they could otherwise not afford to own.
Edmunds recently revealed that millennial-aged consumers are leasing vehicles at higher rates than the overall car-buying population, and that they seem to prefer larger and more luxurious models.
Edmunds analyzed car registration data and found that 28 percent of all new car purchases by millennials between the ages of 18 to 34 in 2015 were leases. This percentage exceeds the industry-wide lease rate of 26 percent and reflects a 46 percent jump in leasing by millennial-aged drivers over the last five years.
A survey conducted in June by Edmunds found that 57% of millennials said they were willing to put no more than $2,999 down for a new car, and 54.9% said they were willing to pay no more than $299 a month. Which is why the car leasing trend makes perfect sense and, although unconventional, proves to be financially sound: a consumer who finances their purchase is limited to vehicles priced under $20,000, but millennials willing to lease can use the same upfront limit and monthly budget to lease a vehicle priced as high as $35,000, a range that many larger and more tech-savvy vehicles fall into.
The tech element shouldn’t be overlooked. Jessica Caldwell, director of industry analysis at Edmunds, believes that the leasing trend is being driven by tech. “Leasing allows car shoppers to effectively get into a new vehicle every two to three years, which isn’t dissimilar to people’s smartphone rotation,” Caldwell said. “Being guaranteed a new vehicle in a short time frame ensures that one will be up-to-date with the latest in-car technologies.”
Edmunds found that millennials who acquire a new vehicle are 30 percent more likely to lease it than the general population. Other brands that millennials are more likely to lease are GMC (26 percent more likely), Lexus (23 percent more likely), Jaguar (21 percent more likely), and Cadillac (20 percent more likely). Like Uber, mass transit and ride-share programs, this trend is another example of how millennials are changing the market. For the first time, they are allowing automakers to appeal their tech and luxury – typically reserved for a smaller, older, and wealthier market – to younger drivers looking to ride in style.
So come on down to Arnie Bauer and see why lease vs. finance might just make sense for you!