There's a growing trend among millennials to opt for leasing a vehicle. 2015 car registration data from Polk shows that leasing accounts for 28.9% of all new-car purchases by buyers in the 18-34 age range. The average lease penetration for all buyers is 26.7%.
The data also suggests this isn't a fluke. Leasing among buyers in the 18-34 range has increased 46% over the last 5 years compared to a 41% increase among all other demographics. Research shows it may have something to do with the number "3".
So, what's driving the uptick in leasing among millennials?
Millennials are usually on tight budgets. But, they're also interested in making the most of it and they're discovering that leasing can be a good way to get the vehicles, features and options they want. “Most Millennials understand and accept that they’re on a tight budget and that they need to stick to it,” said Jessica Caldwell, director of industry analysis for Edmunds. “But it doesn’t mean that their financial constraints limit them only to the most basic vehicles to get from point A to point B.”
Of course, there are limits and for millennials the key seems to be keeping the numbers under the "3's". A recent survey found the majority of millennials were unwilling to put more than $2,999 down on a vehicle and wouldn't pay more than $299 per month. With those parameters in mind, most finance purchases would be limited to a vehicle priced under $20,000. Applying the same numbers to a lease, millennial shoppers could consider vehicles in the $30k - $35k range.
“If they see a chance to get into a nicer car while staying within their budget, they’re likely to explore that opportunity,” said Caldwell. “In most cases, leasing opens the door to the bells and whistles that they couldn’t otherwise afford.”
Millennials in the Midwest are leading the leasing trend with Minneapolis-St. Paul, Milwaukee and Grand Rapids-Kalamazoo as the top 3 leasing markets.
The top brands for millennials include Ram, GMC, Lexus, Jaguar and Cadillac - nameplates millennials are 20% to 30% more likely to lease than the general population.
Don't assume your millennial buyers aren't interested in leasing. Those bells and whistles have a powerful pull. Contact firstname.lastname@example.org or ask your CarSoup.com representative how you can better identify and target these buyers.