It turns out millennials aren’t the freakish alien shape-shifters the media has portrayed them as for the last decade. While still less prone to breeding, poorer than their parents, more educated, and inclined towards city living, they’re human after all.
“Where’s the proof?” you ask?
Recent surveys indicate millennials are, in fact, moving to the suburbs and buying SUVs. But that didn’t stop analysts from being dicks about it. “As more people move out of their parents’ basement — and there’s still quite a few living there — we expect to see continued healthy demand for homes,” explained Svenja Gudell, chief economist for Zillow. “Millennials delayed home ownership, just like they delayed getting married and having kids, but now they’re making very similar decisions to their parents.”
More importantly, home ownership means compulsory sport utility shopping. Large SUV sales have increased 11 percent in the first half of 2017, according to estimates from Ford Motor Company. Meanwhile, midsize family haulers increased by 9 percent and small SUV sales went up by 4 percent. Ford’s market research indicates this could just be the tip of the iceberg.
“There’s no question people are waiting longer, but people still want to have children,” Erich Merkle, Ford’s U.S. sales analyst, told Bloomberg in an interview. “As long as people have children and those children grow and acquire friendships, it requires more space.”
Assuming millennials do things by the book (instead of engaging in whatever flaky generational stereotypes news outlets like to pretend they prefer), more of them are expected to move into larger SUVs to facilitate family life. Sales of midsize SUVs will grow by 16 percent between now and 2022, while deliveries of vehicles like the Chevrolet Suburban or Mercedes-Benz GLS-Class will jump by 25 percent, according to a forecast by researcher LMC Automotive.
Today, the largest group of midsize and large SUV buyers are between the ages of 35 and 44, Merkle said. However, as Generation X is significantly smaller than the millennial population, the younger population has more buying potential. In fact, if you don’t subscribe to the generational trends nonsense, simply knowing there are more people coming down the pipe ready to start a family is reason enough to expect SUV sales will remain on the rise.
“There’s going to be an extra 25 million people passing into and through the 35-to-44 year old demographic over the next 10 to 15 years,” Merkle said. “That’s going to lead to a gradual increase in the growth of large and midsize SUVs that’s already starting to happen.”
Sales of the Ford Expedition, Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon, and Nissan Armada were all up significantly in 2016. It was the same for most big SUVs sold in America and 2017 is on pace to be even better. In fact, Nissan’s Armada has already sold more units in the first half of this year than it did in all of 2016.
That growth will be further driven by millennials, the oldest of whom have lifted the annual birthrate for women 30 to 34 years of age to the highest level since 1964, according to the U.S. Centers for Disease Control and Prevention. The bottom line is families of all ages typically want SUVs, especially now that minivans are passé. They’re larger, provide easier access to cargo, promote a sense of safety, and are a good way to show up the neighbors who understood owning a Honda Accord was probably all they needed.
“As a sample size of one, I certainly need a lot of space because it’s really tough to travel with a child,” said Zillow’s Gudell, who drives an Audi Q5.
[Image: General Motors]