Inflation can and often does have a significant impact on the car buying decisions, in particular, in the case of younger people. How much a person earns vs. the cost of goods and services affects the purchasing power of their income and hence the affordability of cars they can manage to purchase.
Inflation can lead to higher interest rates on car loans, making it more difficult for younger people to obtain financing for a car purchase. This can also result in higher monthly payments, which may make it, yet again, more difficult for younger people to save and budget for a new car.
A recent poll, conducted by OnePoll and commissioned by Kelley Blue Book Service Advisor, asked 2,000 American drivers — 1,000 each from Generations Y and Z — about their vehicular needs and purchasing behavior, as part of their overall vehicle ownership and replacement. The poll found that 69% are currently considering getting rid of their current car for a new one or even replacing it with another transportation strategy, e.g. ride sharing.
When it’s time to buy again, many said they’d learned lessons from their first cars. For instance, they will look for a better gas economy (32%) car, cost of maintenance (31%) and durability over aesthetics (31%).
When millennials anticipate potential problems with their existing cars, such as hefty repair issue, they seriously consider the idea of paying for repair only when the repair costs are low. If not, they opt to go buy a lower spec car for a lower monthly payment without dishing out thousands of Dollars on repair.
Many dealerships are interested in giving a good-enough price for a second hand used car to give incentive to younger people to buy their car, especially to build brand loyalty and future potential customer database.
