Netflix. Cell phone bills. Ride-sharing services. Millennials embrace the rental economy — in fact, many prefer it to ownership. As the generation born between the early 80s and late 90s gains more buying power and influence, car dealerships are curious about the best way to reach them. And it looks like auto leasing may be the answer.
According to new data from Edmunds.com, more than 34 percent of millennials chose to lease rather the finance their vehicles in 2016 — a rate that’s higher than any other age group. Vehicle leasing also appears to be growing in popularity as millennials get older: between 2012 and June of 2016, lease contracts grew by 49 percent among this group, as reported by Dealertrack.
So, why is auto leasing the new buying for millennials? For starters, it gives buyers flexibility — something many members of this generation value. Younger millennials tend to buy mostly compact vehicles, while older Millennials starting families may prefer SUVs. An auto lease allows these drivers to choose the vehicle that meets their needs today, without getting locked into a long-term commitment.
Because millennials make up a younger market segment, they may have less to spend when they first enter the auto buying market (although this will of course change as they grow older). Many may be entering new careers, and some may have college debt — making auto leasing an attractive option. Lessees save an average of $120 per month compared to buyers, according to Edmunds. They’ll also spend less on auto maintenance, as new cars are covered by factory warranties.
It’s been widely reported that millennials have a penchant for technology. Leasing lets them enjoy the latest vehicle features, like built-in GPS, rear cameras and Wi-Fi Hot Spots, with the option to get a new vehicle at the end of their lease. Newer cars also have better safety features — something that matters a lot to millennials.
It’s clear that millennials like leasing, but what does this mean for car dealerships? (It’s good news.) For one thing, we now know that millennials have major buying power. In 2016, millennials bought 4.1 million vehicles in the United States, accounting for 29 percent of the market, according to data from J.D Power and Associates. They also made up more than a third of all auto loan originations in 2015, according to Dealertrack.
For years, dealers have worried that this generation might never want to buy a car. We know this assumption was simply incorrect. While much has been made of the rise of car-sharing services like Uber and Lyft among millennials, catching a ride can’t fully compare to driving your own vehicle. For millennials, auto leasing appears to hit the sweet spot between renting and buying.
Whether millennials are buying or leasing, you definitely want them at your dealership — and the more options you can offer to meet their needs, the better. Auto leasing gives dealers one more way to reach this growing audience.
At Drivrz Financial, we provide 21st century auto leasing for savvy drivers — including millennials. Currently, millennials make up more that 42% of the leasing population, offering dealerships a growing segment of auto leasing opportunities — and leading to a gateway of customer retention.
Drivrz Financial leases give drivers the flexibility to choose the vehicles they want, for low monthly payments, and trade up for a new vehicle when their lease expires, with exceptional service. For our dealer partners, we provide advanced technology for fast funding, instant approvals and an effortless auto leasing experience. Interested in learning more about becoming a dealer partner or applying for a Drivrz Financial Lease? We’d love to hear from you. Contact us today to learn more or visit drivrzfinancial.com.