Despite a growing number of digital auto financing platforms tailored for young millennial audiences, the generation is still struggling to attain the financial stability necessary to invest in a vehicle, Andrew MacDonald, senior product manager at Vroom, told audiences at The 2016 Auto Finance Summit.
“Most of the buying power is not in the millennial generation, so while they may be interested in the business model they’re not really purchasing a car right now,” MacDonald said. “Especially after 2008, millennials have more student debt than any other generation before, and that’s stopped them from being able to finance cars and buy homes earlier.”
That’s not to say millennials aren’t purchasing at all, MacDonald was quick to point out. He noted that 25% of new car vehicle purchases came from the millennial group and that the 18- to 35-year-olds surpassed GenX in new car vehicle purchases relatively recently.
Yet, there are 25 million more millennials than there are in generation X, so there is still some question as to whether those positive figures are a product of increased buying power or merely population.
Millennials are also more likely to be interested in ride share opportunities and pooled financing, MacDonald said, but added that the industry has a long way to go before these programs make sense outside of major metropolitan areas.
“Inside a city (ride sharing) becomes a lot more dynamic. I think you’re already seeing it happen at a much faster pace,” MacDonald said. “I’d look there for what the future is going to look like, but those solutions do not work in a suburban environment.”
Panelists at the summit recommended casting a wide net in order to attract both the millennials who would prefer to text a customer service representative as well as the baby boomers who would rather call.
While these online lending solutions sometimes seem targeted at younger audiences, Serge Vartanov, chief marketing officer at AutoGravity, pointed out that startups are trying to make the F&I experience better for everyone.
“If you look at AutoGravity you see people who are 18 to 35 but you also see people who are 65 [and up],” Vartanov said. “It’s not like if you’re 65 you want to sit in the F&I office for four hours — nobody wants to have a bad user experience.”
