Millennial interest in SUVs picks up
Automakers hopeful after years of concern
Get ready for a surge in family-SUV sales as millennials start snapping up the practical vehicles as they start to nest in suburbia and raise kids.
The prospect makes automakers ecstatic. For years, the conventional wisdom held that millennials — at 80 million, the biggest generational group in the U.S. population — didn’t care about cars, kids or houses with big yards and accommodating garages.
Heck, worries were so deep about their indifference toward cars that there were worries about whether they would all end up getting driver’s licenses.
Millennials have helped fuel demand for smaller SUVs — the auto industry’s hottest segment — and now it looks like they’ll go bigger.
“The future is very bright for SUVs,” Autotrader senior analyst Michelle Krebs said. “Our surveys show 40% of car buyers say an SUV is their dream vehicle, and owners become very loyal to the segment once they get their first SUV.”
Millennials are beginning to look like the generations before them.
“Baby boomers expanded and collapsed whole market segments as they moved through the stages of their life,” Ford U.S. sales analyst Erich Merkle said. “Millennials will do the same.”
Ford’s best-selling vehicle with millennials is the Explorer, which has three rows of seats and can carry up to seven people. Ford will introduce a new version of the larger Expedition and Lincoln Navigator this year. They have seats for up to eight.
“There’s a big group that’s ready to make purchase in this segment,” said Sue Wright, product marketing manager for the Chevrolet Traverse SUV, which just launched a new version that carries up to eight. Chevy also has a pair of larger SUVs it will replace over the next couple of years, the Tahoe and Suburban.
“There’s a flood of millennials coming into this segment,” Wright said. “There’s definitely an opportunity for growth.”
Sales of all SUVs are up, but midsize and larger models like the Explorer and Expedition lead the pack. Large and midsize SUVs are up 12% and 9% this year, respectively, compared with 4% for compact SUVs, Merkle said. Sales of cars were down 11.2% through July, while all trucks and SUVs are up 4.1%
Buyers like SUVs’ high seating positions, which become ever more important to visibility as other SUVs crowd the roads. SUVs also benefit from the traditional perception that they’re more durable and rugged than cars, even vehicles like the Explorer and Traverse that are not engineered for serious off-roading.
Millennials are reaching peak kid-hauling a few years later in their lives than earlier generations because of social changes and because the Great Recession slowed their career and income growth. Some have also begun collecting cars as their income and leisure time grow.
Autotrader’s data show 45% of SUV buyers like the vehicles’ cargo space, 40% the higher seating position and 36% the ease of getting in and out.
“SUVs have overcome the traditional image challenges of fuel economy and safety,” Krebs said. “Studies now show buyers think SUVs are safer than cars, because of visibility and because the auto industry introduces some new safety features on them.”
The trend will accelerate for the next several years, Merkle said. Ford’s data show sales of three-row SUVs peak when buyers are 35 to 44 years old. Millennials are just hitting that stage, with plenty more to come.