Car ownership is not the be-all and end-all it used to be. That certainly seems to be the case when you look at global statistics. In 2019, car sales worldwide dropped by more than 4% as auto manufacturers struggled to find buyers in major markets like China, India and Europe.
Global vehicle sales dropped to 90.3 million in that period, compared to 94.4 million in 2018, and well below the record 95.2 million cars sold in 2017. Current estimates strongly suggest that the decline will continue when 2020 figures are released, and so on into 2021, 2022 and beyond.
When the car industry goes into decline, there are major consequences for the global economy as a whole. The International Monetary Fund says that the car industry accounts for 5.7% of economic output worldwide, and 8% of all goods exports. Plus, it is the second largest consumer of steel and aluminum so when less cars are being manufactured due to soft demand, these traditional industries suffer as well.
The decline threatens to be ongoing. That’s because the new wave of consumers, namely Millenials and Gen Z, are turning their backs on car ownership, and in a big way. The influential Forbes magazine recently published a very insightful piece which investigated the reasons why younger consumers are saying no to cars, especially taking ownership of them. Here are some of the main reasons why:
- Ecological reasons. Younger generations acknowledge the need for cars to get from A to B on occasion, but they question why so many of them are required. Families with two or three cars are a turn off for Millennials and Gen Z, and the extra emissions that come with them. While electric vehicles are seen as the way of the future, younger consumers point to the fact that a long road has to be travelled before they present a perfect environmentally-friendly solution. Our younger drivers see less cars in the shape of ride share for city travel and rental vehicles for longer journeys as ideal, as will be discussed later.
- Wary of large capital purchases. The latest generations are more money savvy than we might think. Forbes magazine discovered that getting into debt is something that weighs heavily on young minds, even if it means they can buy something as big as a car. Again, they point to car rentals and ride sharing as their preferred alternative – a pay-as-you-go arrangement where you only spend small amounts of money as needed, instead of forking out one (large) lump sum.
- They see car ownership as a burden. In other words, cleaning it, maintaining it, repairing it, parking it, insuring it, and so on. Gen Z and Millennials are happy for someone else to take on those responsibilities and, you guessed it, they see hire car companies and ride share operators as the answer in that regard. They can use their services when needed, and leave things like maintenance and cleaning to others.
- Ridesharing and rentals are a workable alternative. No surprise that this is one of the reasons our younger consumers are reluctant to actually own a car. Car hire companies and ride sharing services feature prominently whenever the discussion turns to declining vehicle ownership, as it has right throughout this post. It’s the best of both worlds – someone else does the owning while the young consumer occasionally does the driving (or riding)
Ride sharing in larger cities and a cheap car rental for longer journeys between towns are just fine with millenials and Gen Z who want their commitment to a vehicle to be a fleeting one. They can use the service for just as long as they need. That is why hire companies are reporting an increasing number of younger customers who want to drive a car – but will be unlikely to ever actually own one.