The future of mobility for Gen Z in Europe

(8 pages)

Like many generations before it, Gen Z doesn’t always follow the rules. For young drivers who still require a private vehicle, the types of cars they want to own, as well as how they want to own or access them, are fundamentally different from the preferences of older generations.

As part of our regular McKinsey Mobility Consumer Pulse Survey, we asked more than 4,000 customers across Europe (France, Germany, and the United Kingdom) to tell us what they expect from the future of auto finance. We found that using multiple transportation modes is becoming more popular—from the rise of ride hailing and car sharing to scooter rentals. An important part of this investigation also involved understanding the modes of transportation preferred by Gen Z.

Insight #1: Mobility is increasingly multimodal, but early reliance on private vehicles persists

Private-car usage dominates today’s overall mobility mix for older generations. Mobility is more multimodal among younger generations, however, with public transit and micromobility usage more popular because these consumers are more flexible about their mobility usage and often opt for shared and sustainable mobility modes. Looking ahead, consumers say they are moving toward reducing their private-car reliance and adding more shared-mobility modes into the mix. The effect appears most pronounced for micromobility offerings and public transit.

Younger consumers are less likely to use private cars now and plan to increase their use of public transit and micromobility.

Nearly 55 percent of Gen Z consumers are open to sharing their private vehicles with others. We also see twice the interest in leasing bundles with integrated shared-mobility offerings such as bike or scooter sharing and ride hailing. Gen Zers also know the type of car they want. How they want to use their vehicle is distinct from other age groups too:

Going fully electric. The next car is electric for one out of two Gen Z customers in Europe.
Smaller cars preferred. Compact vehicles and even smaller minimobility options are preferred by 64 percent of Gen Zers versus about 50 percent across all other age groups.
Vehicles should be flexibly owned. Leasing is the strongest-growing ownership form.

Leasing is expected to see more growth than other vehicle ownership options in all age groups.

Insight #2: We see clear distinctions between Gen Z and other groups, particularly when it comes to purchase considerations

Leasing is unfamiliar to many Gen Zers. The share of Gen Z consumers who have never heard of leasing is two times higher than all other respondents. Fear of hidden costs and insecurity triggered by a lack of knowledge about leasing are the top two reasons why Gen Z buyers do not choose leasing today.
Design and innovative technologies and features stand out. Safety, advanced driver assistance systems (ADAS), multimedia, and digital car are the most mentioned considerations when choosing a vehicle.
Gen Z is more price conscious. The purchase price is the top buying factor for one out of two Gen Z buyers. More than half of Gen Z buyers would like to start an online car shopping journey based on their budget considerations. The opportunity to get a quote and secure up-front vehicle financing online before choosing a specific car is among the top three disruptions to car purchasing today.
Online-first mentality. More than 55 percent of Gen Z buyers plan to order their next car online, and only 17 percent want to rely entirely on traditional car dealerships, compared with more than 40 percent among older generations. Two out of three Gen Z consumers are likely to choose their vehicle financing online after having configured their dream vehicle, versus fewer than 50 percent across older age groups.

Gen Z consumers are less likely to be familiar with leasing than consumers in other age groups, and many are concerned about hidden costs.

Insight #3: Gen Z still favors leases from dealers and manufacturers

Today, Gen Z buyers reveal slightly different channel preferences from older shoppers when it comes to leasing, but they still trust OEM captive banks. However, the number of respondents who would lease from an independent bank or leasing player is twice as large as for older age groups. This insight should prompt different actions for individual players. While captive players and online leasing companies need to convince the younger generation to consider them as a purchasing channel, independent banks and leasing providers need to think about how to maximize sales conversions.

Gen Z consumers who lease vehicles are most likely to rely on OEM captive banks.

About the McKinsey Center for Future Mobility

These insights were developed by the McKinsey Center for Future Mobility (MCFM). Since 2011, MCFM has worked with stakeholders across the mobility ecosystem by providing independent and integrated evidence about possible future-mobility scenarios. With our unique, bottom-up modeling approach, our insights enable an end-to-end analytics journey through the future of mobility—from consumer needs to a modal mix across urban and rural areas, sales, value pools, and life cycle sustainability. Contact us if you are interested in getting full access to our market insights via the McKinsey Mobility Insights Portal.

Gen Z mobility shoppers exhibit different preferences compared with older buyers, and automotive financing players need to understand those differences to accommodate this new group of customers. Younger consumers use multiple mobility options but are still focused on private cars. They also have distinctive purchasing considerations and are open to integrated offers across channels, rather than just buying from OEMs. These characteristics suggest that Gen Z is edging out from the norm, rather than instigating a revolution. Automotive financing players need to prepare to meet these customers on their own terms to successfully win their business.