Washington - Services like 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 mindset 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."
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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.
Side gigs
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 like 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 became 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 from 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."