The shiny red pearl-colored Subaru Crosstrek caught the eye of Mikaela Gamboa, but it was the equipment on it that convinced the 25-year-old to strike a deal on the compact crossover SUV.
“I like the safety features on the Subaru,” said the Dallas resident who purchased the 2024 Crosstrek less than a month ago after her car broke down. Gamboa, a mother and recreation specialist for a neighboring city, has peace of mind with a rear occupant alert system installed on the Subaru, adding, “You can’t lock the door when exiting the car if there is a child in the backseat.”
Gamboa has stepped up her game, releasing an old Nissan Altima sedan for the sporty Crosstrek, describing it as “just the right size and it fits my needs.” It is becoming the norm instead of a rare occurrence. Gen Z SUV purchases have skyrocketed in recent years to the point car sales among that age group have been left in the dust, citing data provided by J.D. Power.
From 2023 to 2024, SUV sales among Gen Z increased from 52 to 57 percent, while car sales decreased from 34 to 27 percent, according to Michael Polakowski, Data & Analytics Customer Success Manager at J.D. Power, a company offering consumer insights of the automotive industry based on information collected from customers in its network of more than 15,000 franchise dealerships in the U.S.
Alex Long, an Allstate insurance agent in Carrollton, Texas, a Dallas suburb, has noticed this growing trend with his Gen Z clients. “It seems as if cars are being phased out. I am seeing more and more customers switch to SUVs,” said Long, who has worked as an insurance agent for nearly 20 years.
Gen Z shifting gears from cars to SUVs, particularly compact units, is two-fold. The main reason is attributed to the purchasing power of Gen Zers coming of age, Polakowski wrote in an email. “Cars present themselves as a natural entry point into the market for first-time buyers as they come with the lowest price tag. As Gen Zers grow older, and presumably accumulate more money, this gives them more flexibility in what they can afford to buy,” he noted.
With the average cost of a compact SUV hovering around $36,000 in 2024, Polakowski mentioned that price allows Gen Zers a less expensive SUV. “Compact SUVs offer Gen Zers that option without having to break into the $40,000-plus range that would be necessary for any larger SUVs,” he explained.
The second factor contributing to Gen Z purchasing more compact SUVs is favorable equity positions of trade-in vehicles. It is substantial enough to provide a leg up when purchasing a brand-new, more expensive SUV, said Polakowski, adding “Gen Zers today have more trade-in equity to work with compared to what they did five years ago. When a consumer buys their first vehicle, they are less likely to have a vehicle to trade in to help offset the cost of the new vehicle … Having some skin in the game already affords consumers more financial flexibility.”
Gen Zers, like consumers of all ages, are drawn to compact SUVs due to sleek and modern body designs, exceptional fuel efficiency, versatile cargo space, higher driver seat capacity, advanced safety features, and AWD options. The Crosstrek’s gas mileage was a pleasant surprise to Gamboa. “I am getting 30 miles to the gallon,” she said.
Another compelling reason SUV sales have increased significantly in the Gen Z demographic, in recent years, is the affordable cost. Some manufacturers sell compact SUVs below $30,000, including taxes, an attractive price signaling more bang for the buck.
Young women, like Gamboa, are driving compact SUVs sales among Gen Z with roughly 60 percent of females closing deals compared to 40 percent of males, according to Polakowski, revealing the majority of those transactions occur in northern states. “This is all likely due to the fact that customers in these regions have to deal with more snow and ice than other parts of the country, which makes SUVs a preferred option over cars,” he said.
The struggling U.S. economy has not hindered Gen Zers from purchasing vehicles overall, but there have been challenges. Dallas-area insurance agency representatives report there are would-be clients who can afford the monthly payment on a compact SUV; however, the high cost of full-coverage insurance due to their youth often stops the vehicle purchase in its tracks.
Zip code and household income play a role in whether many young adults get to drive home an SUV. Some affluent Gen Z parents purchase an SUV for their child outright. Or pitch in to assist a son or daughter with the cost of vehicle ownership by footing the car insurance bill.
Insurance costs are generally not a determining factor in whether older, married Gen Zers purchase a vehicle, considering the odds are greater a husband and wife share dual incomes. Many Irving, Texas, insurance professionals say they assist more Gen Z couples purchasing SUVs for growing families. Although SUVs are soaking up the spotlight, there are Gen Zers who pledge allegiance to fully-equipped sedans dripping in whip appeal.
Darrius James, a sales floor manager at Clay Cooley Kia in Irving, said from his vantage point the dealership has not seen an excessive amount of Gen Z clients purchasing SUVs, but rather often observes parents persuading sons and daughters to buy them. The desire to impress and be impressed usually wins out. “They (Gen Z) are more into the sunroofs, leather and cooled seats,” James said. “They want a sportier, stylish look because they are trying to compete against each other. It’s all about the competition.”
Most Popular Compact SUVs of 2024 Based on Sales
- Toyota Rav 4
- Tesla Model Y
- Honda CRV
- Chevrolet Equinox
- Chevrolet Trax
- Subaru Crosstrek
- Subaru Forester
- Kia Sportage
- Honda HR-V
- Ford Escape
- Mazda CX-5
- Ford Bronco Sport
- Jeep Compass
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Source: Kelley Blue Book
