Fear Of Commitment? Millennials Prefer To Lease Over Buying Their Cars
Millennials are a stereotyped demographic. They have been said to have a fear of ownership when it comes to large-scale purchases, from home buying to car buying. Certainly, it appears this group has a fear of commitment.
Automakers have long worried that millennials were not interested in car ownership, instead opting for ride sharing services Uber and Lyft as their preferred mode of transportation. While it may be true that millennials may not be in the market to buy a car, they are much more attracted to leasing vehicles.
Lease applications have grown 7 percent year-over-year, helped by a 49 percent increase in the number of lease contracts coming from millennial between 2012 and June 2016, according to a MarketWatch report.
Leases generally translate to lower monthly payments, similar to the "subscription" model millennials have become so familiar with — think Netflix, Inc. (NASDAQ: NFLX), cell phone bills, Amazon.com, Inc. (NASDAQ: AMZN)'s Amazon Prime — the subscription phenomenon is addictive.
"It is something baked into their psyche," said Jeremy Acevedo, a senior analyst at Edmunds.com. "It's not that millennials were never going to get a car, they were just taking their time. They have been slow to the market, notoriously slow," Acevedo added.
With car technology rapidly advancing, especially when it comes to the entertainment options provided through Sirius XM Holdings Inc. (NASDAQ: SIRI), Pandora Media Inc (NYSE: P) and many others, millennials prefer to turn in their cars after a few years through a lease and upgrade, much like they would do with a cell phone.
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