Millennials and auto buying: What really matters to credit unions

There has been a lot of discussion of late on the subject of millennials, especially when it comes to attitudes regarding transportation choices, and specifically vehicle ownership. At the recent CUNA Lending Council Conference, there was an entire session devoted to millennials, with a panel of appropriately aged individuals providing anecdotal testimony to the findings being presented.  In a recent webcast that I hosted on auto lending trends, I was asked about the effect that ride-sharing programs, such as Uber, might have on younger car buyers. The immediate hypothesis being, millennials don’t buy automobiles at the same rate as other generations, and therefore do not want to buy automobiles. Our response to this presumably should be, lenders need to adjust their lending strategies for a world with fewer auto loans.

The only problem with this hypothesis is that it is unproven, and there is a possibility that it could be wrong altogether. If it is, then lenders will miss the mark when it comes to the changes in strategy that need to be made. The conclusion drawn above is a common fallacy in the world of statistics, associating correlation with causation. A classic illustration of this fallacy is the example of how ice cream sales rise and fall at the same rate as burglaries in a community. Therefore, ice cream sales cause burglaries. The fact of the matter is that both the rise in burglaries and the rise in ice cream sales may be linked to the season. They are both correlated, but one does not cause the other. What is interesting is that, again anecdotally, the panelists in the presentation mentioned above all owned automobiles as do the five millennials who are in my family. Using this evidence, I could just as easily come to the conclusion that younger people are more likely to own an automobile today than similarly aged individuals when I was that age. That too would be a fallacy. Let’s take a look at some of the facts.


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