Millennials are getting in on the leasing game.

At least, that’s according to a report from new-car review and pricing Web site Edmunds.com. The report says that leases account for at least 29 percent of new cars purchased by Millennials. That’s 46% more than it was five years ago.

That’s more than what’s being seen with Generation X and Baby Boomers, and its higher than the typical lease-penetration rate of 26.7 percent.


Why are Millennials going ga-ga for leases? Well, for one thing, leases often allow buyers to get into cars they can’t afford otherwise, since the monthly payments are typically lower.

Indeed, according to IHS Automotive, an industry analysis company, the top five cars being leased by Millennials are all luxury vehicles. They are the Lexus IS, Mercedes-Benz C-Class, Infiniti Q50, Lexus RX, and BMW 328. That’s based on volume from January to May of 2015.

So what does this mean, for both the market and the Millennial buyer? For one, it means that there’s a chance that Millennials are reaching for more car than they can afford. Sure, the monthly payment may be lower, but insurance premiums are sometimes higher on leased vehicles. There are still fees that drivers can incur when going over the annual mileage limit to keep in mind, and of course there will be fees associated with the lease up front, such as registration and sales tax.

It also means that Millennials want to buy luxury goods, but their generation has been hit harder than most by the recession and its aftermath, and this group is more likely to be drowning in student-loan debt.

And despite the oft-stated idea that Millennials are all urbanity-loving city dwellers, the truth is that many still need a car to get around. Maybe they live in a city with bad public transit. Maybe they live in the city and commute to the suburbs for work, or vice versa. Maybe they live and work in the suburbs or even the countryside. Point is, Millennials need cars, too, and with the average transaction price of a new car sailing north of $33,000, leasing can be an attractive option.

As long as lessors know what they’re getting into. That’s the trouble with leasing – the payment may be lower, but some of the drawbacks (such as the mileage limit) could be a problem for those who don’t do their research.

On the other hand, this is a boon for the luxury market. Look at those five models listed up top again. While the IS, C-Class, and 328 seem to be on the lower end of the luxury market, the RX and Q50 are priced somewhat higher. If younger buyers are showing an interest in these vehicles, that can only be good for luxury brands, as that equates to a somewhat expanded customer base.

That goes double for those brands that manage to impress Millennials so much that those consumers come back again and again every time their lease is up. A 20- or 30-something Millennial that leases his or her first luxury ride now might be a customer for several more decades.

There’s also one other reason that Millennials are leasing more luxury vehicles – they’re getting older. The top end of the generation is right around age 35. That means some Millennials have either saved enough money – or been promoted enough – to be able to afford a luxury vehicle.

Millennials – is there any way they haven’t changed the automotive industry/greater world at large?