Over the past year or so, you may have noticed that we’ve been talking about and testing more luxury cars than ever before. There’s a very good reason for this: As a team of enthusiastic automotive-inclined Millennial males, we feel that as our generation ages and gains wealth, so does our interest in all things fanciful. We still love fun little cars like the zippy little Volkswagen GTI, and we can’t deny the utilitarian appeal of compact crossovers like the Chevy Trax, but at some point you find yourself halfway up the totem pole and realize that it’s time to elevate your status with a swanky new ride. The days of rev-matching a six-speed gearbox in rush hour traffic are now officially numbered, and for as practical as it was, the respect you get for driving a compact crossover remain far below that of a 5-series BMW.
As millennials climb the corporate ladder, cashing in on stock options and inheriting money from deceased family members along the way, the opportunity to get behind the wheel of an entry-level slab of luxury becomes far more of a viable option. According to a recent report by Bloomberg, the number of millennials who are rolling off car lots in Cadillacs and Acuras is at an all time high, fueled not only by our status in life at the moment, but where we are going as a generation. Upon closer inspection, not everything is quite as it seems; while the luxury game is ours for the moment, we don’t seem to be entirely committed to the idea either.
Bloomberg’s report states that “Lexus, Jaguar, Cadillac, and Acura are among the top 10 brands leased by millennial buyers,” and according to Edmunds, this 18- to 34-year-old demographic “leases 60% of their luxury cars compared with about 50% for other buyers.” While Bloomberg hints that this data is evidence that American millennials do actually like cars and buck previous predictions that this generation would shun driving in favor of public transportation or car sharing, we know that this is a generation of instant gratification and upgrades. While luxury car ownership sounds like a fantastic idea, millennials remain a fickle lot, to say the least.
Millennials are now the second-largest group of new car buyers behind their parents. According to Bloomberg’s projections, they are slated to buy or lease almost 2 million vehicles in 2015 alone. But just because this generation is getting to the point in their lives where they make good money doesn’t mean they’re going to spend it all at once: Typically, a cap of $300 per month for car payments is about as high as most millennials like to go, and after putting down no more than $3,000 at signing, Edmunds noted. By signing a lease, and with the chance to upgrade every two or three years sweetening the deal, it’s no wonder you see more millennials behind the wheel of a BMW or Mercedes than ever before.
Generation Y isn’t really claiming ownership to the luxury market — instead, we are renting it for the time being. While we represent roughly 24% of America’s overall population, for many of us, that six-figure position is still a hair out of reach at this point. Analysts say that once the economy bounces back in full-force and suburban life begins to sink its picket-fenced claws into our soft underbellies, we will begin to buy more expensive cars. And while auto leasing is making quite the comeback, there is no guarantee how long its popularity will last.
That 45-minute commute to the city every morning sure is a hell of a lot nicer behind the wheel of a leather-clad Lexus, and studies show that millennials lease 29% of the time since they like to upgrade their cars around the same time a new smartphone comes out (even when buying a car is likely to be cheaper in the long run). This leads us to a few interesting issues, because while leasing a vehicle does make a lot of sense if you want to avoid repair costs, sluggish performance and fuel economy due to an aging engine, and the shame of having the oldest car in the company parking lot, there is something honorable about finding a car and keeping it.
OK, so fixing an aging luxury car certainly isn’t the cheapest thing. But when you lease a car you aren’t investing your dough in anything, because you aren’t putting money toward something that you can one day sell or give to your grandkids. Instead, you’re borrowing someone else’s car, and paying ungodly amounts of money to do so, because when the lease is up you don’t have anything to show for it besides a new set of car payments.
But millennials don’t seem to mind. According to Bloomberg Intelligence analyst Kevin Tynan, “leasing lends itself to staying up to date with the latest technology.” So even when a decade-old $7,000 Acura can get you around town in style and comfort, and carries with it enough tech to make road trips worthwhile, the promise of even more connectivity and infotainment holds more clout than common investment sense, leaving it painfully obvious that if millennials could ride the newest Samsung Note to the office they would.
This leads us to our final issue with this entire development. The only kind of connectivity most millennials seek out is the kind that adapts to their phone, and has very little to do with the transmission, clutch, suspension, or steering. We have morphed into a generation of “do it for me” individuals, and the DIY days of our fathers faces extinction — only 10% of millennials even know how to drive a clutch. Long-gone are the days of fixing it yourself to save money, or taking responsibility for a prized piece of machinery; the new iPhone is coming out and you’re going to be too busy waiting in line to give that 2004 5-Series a rear differential flush. But, hey, it’s your money and we understand that not everyone has the space to care for a car. Plus, isn’t the whole point of driving a luxury car to show the world that you’ve moved-up in life, and that oil changes are no longer something you have to concern yourself with?