New Delhi: The intention to buy automobiles is on the rise among millennials globally including India despite the popularity of ride hailing apps and climate change concerns, stated a recent study by Duff & Phelps, a New York-based corporate finance advisory firm. The report titled Millennials and Auto Trends, which has surveyed 2,150 millennials across the world, aims to determine if they will buy fewer cars than prior generations.
According to the findings, an overwhelming majority of millennials (75%) globally expect to purchase or lease a car within the next five years, indicating that millennials may be responsible for turning around the struggling automotive industry in the coming years. The findings also suggest that factors, including environmental concerns, city-dwelling and availability of public transportation and ride-hailing services have not dampened millennial interest in car ownership.
India had very high levels of respondents who own or lease, at 89% and 87%, respectively. 100% of city dwellers in the country who do not already own or lease a car expect to purchase one in the next five years. The respondents also stated that due to limited public transportation, 89% of respondents use their car either daily or between two and six times per week. In India, 82% respondents said they prefer car ownership/lease while only 18% prefer ride hailing services. Respondents from India also use scooters, mopeds or motorcycles more often than cars, with 57% of respondents using one daily or between two and six times per week.
Despite the common perception of millennials as an environmentally conscious generation, the majority of millennials across the globe (85%) indicated that having a car is a necessity for independence and convenience, and generally preferable to other, more environmentally-conscious options like ride-sharing or public transportation. Additionally, millennials identified price as one of the biggest factors in a car-buying decision over factors like environmental impact, aligning with the preference of 54% of respondents for traditional gas and diesel engines. Countries where more respondents selected gas or diesel relative to the global results include Brazil, India (the top two at 67%), the US, France, Germany and Canada.
Though most are currently considering expense and convenience over environmental concerns, the findings do indicate that millennials could create a significant market share growth opportunity in the coming years for hybrids or all-electric vehicles (EVs), which have a combined global market share of just 4.7%. Thirty-six percent of respondents said they find these cars the most appealing, compared to gas or diesel.
Globally, personal research (68%), online reviews (49%), family and friend's influencer (48%) and brand reputation/public perception (48%) emerged as the top information sources for millennials car-buying decision process. Information from dealerships and social media were selected least frequently.
“In our inaugural Millennials and Auto Trends Report, we explore interesting trends regarding millennial car ownership and what these mean for automotive industry growth. Although alternative transportation, such as scooters, mopeds and motorcycles, are used often by Indian millennials, it is clear that they value car ownership. This should be music to the ears of the Indian car industry which is currently grappling with sluggish demand," said Varun Gupta, managing director, head of Asia Pacific valuation advisory services and India country leader.