Natalie Plackowski doesn’t need to buy a car anymore. The San Diego State student doesn’t need to take public transportation either. She doesn’t even need to walk.
Instead, she loads an app on her phone, pays $15, and holds a plastic card up to a car’s windshield until she hears the beep signaling that for the next two hours this Zipcar is hers. She won’t need to think about insurance, gas or maintenance. Zipcar, among many others, is one of the car rental services used among Millennials.
“I couldn’t afford to buy a car, so Zipcar was the next best option,” Plackowski tells MiLLENNiAL. Her insurance was $800 a month for three cars when she drove her own car or her parents’ cars, she said, compared to the $7.50 per hour rate to rent a Zipcar.
In 2013, 60 percent of millennials chose renting over buying, compared to 52 percent in 2005, turning us into what is referred to as a “sharing economy” by Goldman Sachs. Since the 2008 recession, more people have chosen to rent homes or apartments instead of making long term investments.
But now, ride sharing services like Uber or Lyft are becoming more prominent over investing in a car or even obtaining a license. But why is this decision to forgo owning cars becoming popular with millennials?
Here are three reasons behind these popular sharing services millennials are using in 2017.
SHARING YOUR CAR WITH THE WHOLE CITY
More than 50 percent of Zipcar’s clientele are millennials, and they have a growing presence on more than 600 campuses, according to Zipcar spokesperson Katelyn Chesley. “As millennials continue to adopt alternative transportation and drive less it has a positive impact on the environment and helps make their local communities and universities less busy and congested,” said Chesley.
“I thought the prices were good because it was about $7-9 per hour, and that included insurance,” said Plackowski. “What I didn’t like was that the cars were sometimes dirty… mostly in the cup holders.”
To see if Zipcar is supported in your city, check their website at www.zipcar.com. There you’ll find the nearest pickup location, a list of rates and what kind of cars are available.
NO MORE PARKING IN L.A.
Some millennials are forgoing cars altogether and turning to ridesharing services like Lyft or Uber. For Emily Chidester, a marketing major at Loyola Marymount University in Los Angeles, using a ridesharing service is more about convenience. “The traffic and parking situation in L.A. is horrendous, and sometimes it’s much easier to call an Uber,” said Chidester.
“Traffic is unavoidable… but it is definitely more convenient to get dropped off and picked up right at the door.” Chidester is always on the move and visiting different marketing companies in L.A. every week, and punctuality is important to her, she said.
As of 2017, the cost of an Uber varies by location and how far you’ll be riding. According to their website, www.uber.com, costs begin with $1.85 flat fee for booking. If you wanted to ride from Beverly Hills to West Hollywood, Uber charges $0.90 per mile and $0.15 per minute. There is no charge for insurance.
During busy times, there may be what is known as a “surge” on pricing, where users will have to pay an extra fee depending on the demand for drivers. On the other hand, according to the U.S. Bureau of Labor Statistics consumer expenditures report in 2015, the average American with an average salary of $70,000 spent approximately $9,500 on transportation, including gasoline and vehicle purchases, and approximately $340 a month on personal insurance.
WHY IS THIS TRENDING MORE?
Indiana University Dean of the College of Arts and Sciences and economics professor Larry Singell had a few reasons. The first being many millennials are choosing to move to urban environments, where its expensive to own just about anything, he said. Most people can’t afford to own an apartment in those areas, let alone a car. “At a certain age you can’t even have an expectation of owning,” he added.
Next, Singell believed that technology is making it easier to not own things like a car and reduces costs. He mentioned that Uber makes it easy to use with their app, and that in his daughter’s experience in New York City, the cost of riding an Uber is less expensive than a Yellow Cab. On top of that, Singell’s daughter tends to take a shared Uber, which picks up more people than just her party and lowers the cost even more.
Singell’s children both have drivers’ licenses, but they weren’t in any rush to get one. He had to insist that they get them right away. “I don’t think they would have done it… I got a drivers’ license on the day I could.”
Finally, Singell reported a perceived change in the beliefs of the millennial generation regarding social issues, like wealth distribution. “The value of ownership, I think, is something that has been devalued by society as a whole,” he said.
WHAT’S NEXT FOR OUR ECONOMY
With millennials trending more toward renting or using rideshare services, what does this mean for the future of the economy? “When you own something, it’s an asset,” Singell pointed out. “Assets have values to them that are worth something later… there will be consequences for people who have fewer assets.”
While houses have appreciating value to some extent, he said, a car is still an asset but to a lesser degree. In most cases, a car will depreciate in value immediately after purchase. While not all assets appreciate, they still have value, Singell added. He believes that millennials are shaping this economy by their choice to rent property over investing, which will change both the market and the way businesses operate.