Millennials could end up being a boon to the U.S. auto market

DETROIT — It turns out millennials don’t hate driving, after all.

As the generation born between 1981 and 1996 begin to reach their family formation years, they are getting licensed to drive at the highest rate in 40 years, an analyst at Benchmark Co. said in a report Monday.

Licensed drivers in the U.S. reached a record 227.5 million in 2018, and the portion of the population that’s driving has risen every year since 2014, the report said.

That’s good news for automakers that have fretted over young Americans spurning the rite of passage that is getting one’s driver’s license at age 16. Millennials have simply delayed that step, but are now beginning to get them in numbers equal to or higher than their car-loving baby boomer parents. At 84 million strong, they now outnumber boomers, with about 20 percent more births per year.

“The impact on the auto sector from the millennial generation could be as great as the impression the baby boomers had on the industry in the 1980s,” Mike Ward, Benchmark’s auto analyst, wrote in the report. “Over the last five years, there were 15.4 million new drivers in the U.S., the biggest comparable increase since the 1974-78 period.”

The first millennials reached 35 in 2016, toward the beginning of the auto industry’s record five consecutive years of at least 17 million U.S. vehicle sales. Traditionally, license rates begin to peak when people reach their mid-30s and millennials are no different. They are having babies, buying SUVs and moving to the suburbs.

“We believe underlying demographics support normal demand of 16.5-17 million units annually over the next 5-10 years,” Ward wrote.

Licensed drivers will grow by 12.5 million people in the U.S. over the next five years, Benchmark forecast. By 2025, there will likely be a record 245 million licensed drivers in the U.S. That could result in an extra 3 million vehicle sales a year.

“The key demographic group of people aged 35-44 years continues to grow until 2034 and could provide growth for the industry for the next decade,” the report said.

Young people continue to be slow to get their driver’s license. In 2018, just 25.6 percent of 16-year-olds were licensed to drive, down from 46.2 percent in 1983, according to a study by Michael Sivak, managing director of Sivak Applied Research. But more than nine in 10 U.S. residents had a driver’s license in the 35-39 age group in 2018.