Why Aren't Millennials Buying Cars?

Why aren't millennials buying cars?

The numbers show that fewer young Americans own cars, and the recent decline has been thoroughly documented, TIME reported.

"From 2007 to 2011, the share of sales to car buyers aged 18 to 34 fell nearly 30 percent," said an Edmunds.com report on millennial consumers published last fall.

Car sales have definitely dropped among millennials. The ongoing debate is whether the fall in sales is due to the still-recovering economy or a millennial mindset that considers a car too much of a liability.

Automakers deny that millennials are uninterested in buying cars, citing the economic downturn as the reason for lower sales.

"I don't see any evidence that the young people are losing interest in cars," Mustafa Mohatarem, General Motor's chief economist, told Automotive News last summer. "It's really the economics doing what we're seeing, and not a change in preferences."

A recent study from Deloitte seems to provide support for that claim.

"Well over half (61 percent) of Gen Y consumers in the Deloitte report expect to buy or lease a car within the next three years," Craig Giffi, Deloitte vice chairman, said in a press release as quoted by TIME. He further noted that "almost a quarter (23 percent) expect to purchase or lease in the next 12 months--and a mere 8 percent do not expect to ever purchase or lease a vehicle."

But another factor may be at play. According to TIME's report, industry analysts have offered the theory that in today's connected era, having a car is no longer considered a necessity. When millennials have Facebook, Twitter and texting, they don't need a car to have social connectivity. Owning a car is also an expensive responsibility that means insurance fees, parking issues, upkeep and lease payments.

Either way, dealerships and carmakers will have to shift with the times to appeal to millennials. Young people shy away from the traditional car sales model, so dealerships are making changes such as selling cars online and contacting millennials through text messaging.