Through May, 21% of millennial car purchases were for new vehicles — up from 18% last year — and more than a third of those young consumers turned to leasing to complete the purchase, according to a newly released Edmunds report.
The lease penetration rate for millennials this year is 35%, compared with 30% for the population as a whole, Jeremy Acevedo, Edmunds manager of industry analysis, told AFN.
“[Millennials] are a bit more inclined than the rest of the nation to lease,” Acevedo said. “I know that’s an avenue that a lot of millennials like to pursue, and it does require good credit, but it is the cheapest way to move into new vehicles.”
Despite this focus on low cost, OEMs are targeting the age group with a growing number of leaselike subscription services that start at more than $1,000 per month.
“[Subscription services] are definitely speaking to a millennial base,” Acevedo said. “The one thing that it shows a disconnect on, though, is the pricing.”
According to the report, a three-year subscription for a Porsche 718 Boxster through Porsche Passport would cost $72,500, whereas a traditional three-year lease on the same vehicle would cost $49,481. However, some subscription services can save consumers money. For example, a three-year Care by Volvo subscription would cost $1,589 less than a traditional lease for the vehicle over the same term. There are also used-car programs such as Fair that offer lower monthly rates.
“[Subscriptions are] definitely a proof of concept and not something that I think has mass appeal in this era, but [rather] to get the ball rolling on a new method of ownership,” Acevado said. “The approach here is to make yourself synonymous with the perspective of the future for a lot of these automakers who are getting involved.”
