If you were to travel back to the 80s and ask the average American what they most value in a car, they might answer “horsepower,” or “responsive control.” However, values have changed. The answer to that question today would almost unanimously be “fuel economy.”
Millennials have unique values that make a clear impact on their purchasing decisions. They are concerned about the effects of pollution on the planet, but they also are concerned about the effects of gas pumps on their wallets. Shell-shocked by the Great Recession and often carrying student debt or struggling with poor, limited credit, this generation of consumers doesn’t want to compromise on major purchases like a vehicle.When it comes to choosing an automobile, millennials strongly favor fuel efficient, affordable cars. The auto industry has changed in recent years to meet these demands.
A Rising Demand for Green Vehicles
There is no question that millennials have spurred a dramatic shift in the auto industry. As they enter their prime earning years, they make up a larger share of the lending market, and of car buyers. Today, there is a clear demand for hybrid and electric vehicles. This likely stems from millennials’ need to manage debt; fuel-efficient vehicles are cheaper to operate, and can even confer some tax incentives. Of the 75 million millennials living in the US, a whopping 76 percent want an eco-friendly car; this represents a huge shift in consumer demand.
While this shift has mostly occurred throughout the last decade, the first mass-produced hybrid cars actually made a splash in 2000. The car model that spearheaded the green vehicle movement was the Toyota Prius. While other car manufacturers had hybrid offerings available prior to the release of the Prius, Toyota’s gamble was the only early model to gain serious traction.
The success of this vehicle demonstrated to other manufacturers that eco-friendly vehicles are absolutely viable in the auto market. Throughout the following decade, industry heavyweights like Ford, General Motors, and Honda entered the fray. More recently, advancements in auto technology have led to more sophisticated features in hybrid vehicles, and even the popularization of electric vehicles. Consumers have more green options than ever before.
Millennial consumers weren’t the only group concerned with the risks associated with higher pollution; in fact, the U.S. government enacted legislation in August 2012, demanding that new cars must average 35.5 miles per gallon by 2016. Young adults are having a clear impact on legislation affecting the auto industry.
Since millennials usually need to manage unwieldy student debts, they demand fuel efficiency in order to save money on the road. The auto industry has responded with a wide variety of eco-friendly features. Here are four of the most common green features in cars today:
- Electric motors: Electric vehicles obviously require an electric motor; they are substantially cheaper to operate and produce less pollution. For gas-electric hybrids, there are some additional benefits. Modern hybrids are equipped with the capacity to switch to EV (electric vehicle) mode. Speed suffers when EV mode is activated, so you won’t be burning rubber on the highway — but it will result in quieter, less expensive travel.
- Emission sensors: While many unknowing drivers have grown accustomed to ignoring that little “Check Engine” light on the dashboard, it is actually likely an indicator that something is wrong with your car: it is either producing excessive pollution, or the emission sensor is failing. Emission sensors — also known as oxygen sensors — check for oxygen levels and reports potential problems. This is essential for proper maintenance, and serves as a helpful reassurance for environmentally conscious drivers.
- Eco mode: Similarly, many drivers are unsure of what the “eco mode” function in modern cars is intended to do. It is actually a money-saving feature that can dramatically reduce fuel consumption. The precise nature of this function varies for each car model: some models will alter throttle and transmission behavior, reduce the HVAC system, or reduce fuel consumption during deceleration.
The Question of Affordability
While these innovative features can save some serious cash at the pump, consumers must carefully weigh fuel savings against the upfront cost of an energy efficient car. Environmental concerns play a major role in this decision. Millennial shoppers must be frugal in order to manage their debts and stay afloat. Those with bad credit may worry that they won’t be able to secure the loan they need to get a car that reflects their values, or that investing in an eco-friendly vehicle will mean too much additional debt. Can young shoppers justify buying an eco-friendly car?
Let’s crunch some numbers. A new reasonably priced hybrid typically has a sticker price of about $25,000. This is about $5,000 higher than a comparable gas guzzler. How long would it take for fuel savings to recoup this higher upfront cost? It depends on your driving habits, but Consumer Reports estimates that it would take at least five years to break even. As most cars have a lifespan of eight to 11 years, hybrid cars bring about huge savings. Electric cars have an even higher price tag, but bigger savings. If you can get a green car at a discount, this proposition becomes a no-brainer.
Regardless, many millennials find it hard to justify this upfront cost. Because many young adults have poor credit — or, worse, no credit — financing this investment can prove to be difficult. Fortunately, bad credit car loans are available for those in need. These loans open up many options for millennials who find their options to be limited. With the help of reputable auto finance companies, even struggling consumers can save at the pump with eco-friendly vehicles.
The automotive industry has seen dramatic changes in the past two decades. Millennials have unique concerns in regards to fuel efficiency and pollution. Even with their historic levels of debt and bad credit, they still managed to make their expectations known to the global auto industry. Car manufacturers have responded with gusto, offering a bevy of eco-friendly vehicles and features. While the upfront cost of hybrid and electric vehicles can be intimidating, they are a wise investment for forward-thinking shoppers.