Services such as Uber and Lyft have long been pitched as a replacement for car ownership.
But a new report suggests that those ride-sharing services may be giving drivers, particularly millennials, another reason to buy a car.
Roughly 1 in 6 millennial car buyers — or about 15 percent of them — plan to drive for Uber, Lyft or another similar service, according to a recent report by market research firm Mintel. That’s compared to about 9 percent of the overall population.
“A lot of millennials have the mind-set that they’ve got to have a side hustle, something like Uber to supplement their income,” said Buddy Lo, an automotive analyst for Mintel. “And now that the recovery is taking hold, they’re starting to buy new cars.”
Millennials, roughly defined as the generation born between 1980 and 2000, came of age during the financial crisis, with many of them graduating into the worst job market in decades. As a result, 20- and 30-somethings often put off traditional milestones, such as buying new cars and homes, getting married and having children.
But now they’re catching up, says Lo. And one way they’re doing that is by buying new cars.
“Millennials are starting to hit life stages often associated with the purchase of new cars: landing a new job, getting promoted, getting married and having children,” Lo said. “There was a lot of pent-up demand from the recession.”
Even so, there are signs that today’s young Americans are making less money — and are generally worse off — than previous generations were. Wages have been stagnant for years, affordable houses are difficult to come by, and Americans now carry a record $1.4 trillion in student loan debt. So while buying a $300,000 home may be out of reach for many, a new car for $15,000 is a much more plausible proposition.
There is also mounting evidence that millennials are increasingly looking to side gigs, whether teaching fitness classes, blogging or designing websites, to help make ends meet. Roughly 40 percent of millennials have second jobs, according to a recent survey by the site CareerBuilder.
And as young workers seek flexible work arrangements, they are increasingly looking to services such as Uber, Lyft and Sidecar to make extra cash. The ride-sharing economy has grown rapidly in recent years to become a multibillion-dollar industry.
“The emergence of ride-sharing has been a boon to millennials,” Lo said. “It’s become a great way for people to make money off a depreciating asset: their car.”
Although its unclear how many new cars are purchased each year for the purposes of ride-sharing, many services require drivers to own relatively new vehicles. Uber, for example, requires drivers to have vehicles made in 2006 or later, while Lyft’s cut-off is 2005 in most states.
In all, Americans are expected to buy 18.46 million new cars this year, a 4.4 percent increase over last year, according to Mintel. (Other forecasts, however, are less rosy: The National Automotive Dealers Association, for example, expects 17.1 million new vehicles to be sold this year.) The majority of millennials — 84 percent — said they planned to buy new cars instead of used ones, as they seek newer technologies and advanced safety features, according to Mintel.
More than 75 percent of Americans who use ride-sharing companies said they still planned to buy or lease their own cars, according to a 2016 survey by Kelley Blue Book.
“Ride- and car-sharing services are getting a lot of attention these days,” Karl Brauer, senior analyst for Kelley Blue Book, said at the time. “While there are numerous benefits to ride-sharing and car-sharing, our data reveals that owning a car still reigns supreme.”