SANTA MONICA, California — Millennial car buyers have figured out that leasing is the way to get into a nicer car while staying within their budget, according to a new Edmunds.com analysis.
In fact, buyers aged 18-34 opt to lease their vehicles at a higher rate than the overall car-buying population.
Leasing has accounted for 28.9 percent of all new-car purchases by Millennials in 2015, according to an Edmunds' analysis of car-registration data provided by Polk.
The percentage exceeds the industry-wide lease penetration rate of 26.7 percent and reflects a 46 percent increase in leasing by Millennials over the last five years. In comparison, the share of leasing among all car shoppers has increased 41.7 percent during that period.
"Most Millennials understand and accept that they're on a tight budget and that they need to stick to it," said Jessica Caldwell, Edmunds.com director of industry analysis. "But it doesn't mean that their financial constraints limit them only to the most basic vehicles to get from Point A to Point B.
"If they see a chance to get into a nicer car while staying within their budget, they're likely to explore that opportunity. In most cases, leasing opens the door to the bells and whistles that they couldn't otherwise afford."
In an interesting twist, Millennials tend to gravitate toward leasing certain brands compared to the overall car-buying population.
Millennials are 30 percent more likely to lease a Ram truck than the general population, the analysis found.
The Millennial leasing rate outpaces that of the total population in every one of Edmunds' 24 vehicle segments except for one: compact cars. An estimated 25.5 percent of all new compact cars registered by Millennials this year were leased, compared to 26.2 percent of new compact cars registered by the general population.
Midwestern Millennials love leasing, the analysis found.
In the most dramatic example, Edmunds found that Millennials in the Grand Rapids, Michigan market are 33 percent more likely to lease their new-car purchase than the city's general car-shopping population.
This trend is also evident in Minneapolis-St. Paul and Milwaukee.
A previous Edmunds' study found that Millennials think they are better car shoppers than their parents.
That attitude is not surprising, according to generational researchers.
"Boomer moms and dads are setting out to produce kids who are smart and powerful," according to the book Generations: The History of America's Future, 1584-2069 by William Strauss and Neil Howe. "Kids possessed of rational minds, a positive attitude and selfless team virtue."
Edmunds says: Sounds like Millennials have it all figured out when it comes to car leasing.