2014-03-26

Co.Exist

Millennials Don't Care About Owning Cars, And Car Makers Can't Figure Out Why

Driving numbers are down for younger people and the auto industry hasn't found a way to respond. It's because they don't understand why millennials could possibly not want to drive.

Auto manufacturers today are scratching their heads, trying to figure out why the millennial generation has little-to-no interest in owning a car. What car makers are failing to see is that this generation’s interests and priorities have been redefined in the last two decades, pushing cars to the side while must-have personal technology products take up the fast lane.

It’s no secret the percentage of new vehicles sold to 18- to 34-year-olds has significantly dropped over the past few years. Many argue this is the result of a weak economy, that the idea of making a large car investment and getting into more debt on top of college loans is too daunting for them. But that’s not the "driving" factor, especially considering that owning a smartphone or other mobile device, with its monthly fees of network access, data plan, insurance, and app services, is almost comparable to the monthly payments required when leasing a Honda Civic.

What auto manufacturers, along with much of corporate America are missing here is that the vehicles to freedom and personal identity have changed for this generation. The sooner brands get a grip on this reality the sooner they can make adjustments in how they market to and communicate with this core group, which is essential to their long-term success.

“Porsche, there is no substitute”…Or is there?

It used to be that having your own car provided the ultimate sense of freedom for young adults, allowing them a means to get together with friends, establish independence and separate from their parents. It was a critical right of passage to real adulthood to drive your own car, and it was the one place you could blast music without your parents complaining. Popular movies of the later Baby Boomer’s and Gen X's coming of age, such as Risky Business and Dazed and Confused shaped this generation’s sense of self, portraying images of fancy sports cars as the ultimate young adult possession.

Today however, older teens and young adults don't need cars to achieve a sense of self and freedom. This generation’s coming of age consisted of graduating from the Internet and CD-ROM computer games to hand-held mobile devices where they’re establishing identities, relationships, and individualism online all day long--as much as, if not more than, in the real world.

Car Sales are Down, Technology Rules--The Fuel Behind the Facts

With recent studies showing a huge decline in auto sales among the millennial marketplace, it’s no wonder auto manufacturers are in a mild state of panic, realizing they’re missing out on a generation that wields $200 billion in purchasing power. Numbers don’t lie, and over the last few years statistics have shown a significant drop in young people who own cars, as well as those with driver’s licenses--and that decline continues among the youngest millennials, meaning this is not a trend that’s going away anytime soon. From 2007 to 2011, the number of cars purchased by people aged 18 to 34, fell almost 30%, and according to a study from the AAA Foundation for Traffic Safety, only 44% of teens obtain a driver’s license within the first year of becoming eligible and just half, 54% are licensed before turning 18. This is a major break with the past, considering how most teens of the two previous generations would race to the DMV for their license or permit on the day of their 16th birthday.

Unlike the Baby Boomers, who gained their independence and individuality from movies, music, cars, and motorcycles, older teens and young adults today are expressing their freedom through social channels--these are their new wheels and they get the keys now starting at about age 9. Marketing to this group demands a different mindset that involves taking the time to understand the neo-millennials.

Younger Millennials Are Not Who You Think They Are

Exacerbating the issue is the general misperception that millennials are lazy, privileged, and putting off adulthood. This leads many marketers down the wrong road when attempting to connect and engage with this generation. Our latest research shows that these 17-25 year olds are not who most adults think they are. In multiple studies of college millennial consumers (CMCs), our studies reveal a highly motivated, open-minded, passionate, and extremely engaged consumer. They could even be considered more practical than generations before them. For instance, one study of CMCs conducted in May of 2013 showed students using their summer jobs to set them up more securely for early adulthood. Out of more than 1,600 college students surveyed:

  • A full 96% were focused on making money to curtail their tuition and other college expenses.
  • Nearly 30% needed to make $4,000 or more for the summer.
  • Nearly 50% of students were engaging in some form of “paid internship,” in an effort to gain both pay and valuable job experience.

While they might appear distracted and lazy gazing at their phones, in reality, they are keenly aware of what’s happening around them, perhaps more so than other generations, and focused on their near and long-term opportunities.

Gadgets over Wheels

Because millennials use technology in every facet of their lives--from mobile phones to tablets and laptops--to connect with friends and family and to get work done, the tech gadget is their most prized possession, and has a much higher value to a CMC than transportation or owning a car. Think about it: while CMCs are likely to share a car and a ride, there’s no way they would ever share their phone.

CMCs game together and hang out virtually, they don't have that same need to physically get together as prior generations. The CMC’s popularity and relationships are defined by their online status, not their "cool ride" and they make all of their connections online. millennials search for jobs online. They prefer to coordinate dating online, and meet people through websites and apps.

So Is the Era of the Car Over?

Brands looking to target this unique audience need to make adjustments in their communication and engagement, while making sure they appeal to this group’s fundamental interests. Companies like our client ZipCar, for example, are tapping into millennial preferences for practical, accessible, and environmentally friendly modes of transportation that neither attempt to define or detract from these young adults’ online connections and freedom. Through an innovative, successful marketing campaign, Zipcar took their messaging and experiential peer-to-peer program to over 45 college campuses nationwide, resulting in 39% YOY growth in applications, 9.9 million impressions, and 6,200+ new applications.

Although they can’t expect to match millennials’ preference for technology, automotive manufacturers and dealers can promote merchandise and features that meet this generation’s interests, such as tech-enabled cars with voice-activated communications and entertainment system and in-car connectivity as an extension of their phones. The first generation Ford SYNC system features voice-activated calling, music, text messaging, as well as the ability to allow drivers to connect to news, business, and real-time traffic. We’ll be seeing even more versions of the connected car in the upcoming year.

Perhaps it's a sign of maturity that this next generation of consumers doesn’t feel the need to define themselves by their cars, but instead more by what they say, share, capture, and create. But what auto manufacturers and other consumer brand companies need to be thinking is, “How can I help them say, share, capture, and create more?” They can start by gaining a better understanding of the millennial consumer, their interests and behaviors, to fully engage with them in their world. This will help identify and/or create situations and niche opportunities where car use and ownership is an advantage. Then they can extend the dialogue to younger millennials in particular, reaching them to create a new definition of freedom and empowerment for a new generation.

[Image: Young people walking via Shutterstock]

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98 Comments

  • zaydsharif

    The major problem with having a car is insurance. For anyone under 25 years old, the insurance prices are ridiculous. And the same goes when attempting to rent a car. Why own an 8000 euro car when the insurance for it is 15000 euros per year??? For someone over 25 this price comes down considerably to just 500 euros per year. Furthermore, why rent a car for a week at a cost of2000 euros when either of my parents could rent it for 650 euros. Besides, being at university (medical school), where do people think my money comes from? Even with a part time job I can't afford my accommodation, food, energy bills, phone bills etc. Most of my expenses are still paid for by my parents. If car companies wish to sell more cars to young people, then they need to sort out the insurance companies. Not all young drivers are dangerous and they should take other factors into account. from a 22 year old millennial

  • Jake Franklin

    For $1000, I can make a small deposit on a used car with questionable history

    Or

    I can purchase a new, very high quality road bike that costs next to nothing to own and operate, gets me in shape and is eco-friendly.

    I can rent a car when I need to drive.

    Source: 25 year old millennial.

  • I think this is a valuable article, but I do think that some of the ethos is wrong. As a 28-year-old millennial, I do own a car. Most of my friends owned cars as well. Even living in Washington, DC with access to a Metro and bus network, we saw a value in owning vehicles.

    I think that some millenials have no interest in owning a car, but no the majority. It may be that people are delaying owning/leasing a car until later in life, post-college, but the desire for the vast majority is probably still there, considering that there are very few American cities with above-average public transit options.

    Also, this struck me as a huge stretch: But that’s not the "driving" factor, especially considering that owning a smartphone or other mobile device, with its monthly fees of network access, data plan, insurance, and app services, is almost comparable to the monthly payments required when leasing a Honda Civic. What Civic leases for less than $200 a month?

  • 1: Depends where you live. Most millenials choose to live in compact urban environments where public transport is great and car sharing is freely available. 2: The internal combustion engine is terrible. It's over 100 years old and not worth buying new. If more manufactures built good electric cars and kicked gas to the curb they would have a little more success. People resent big oil and try not contribute where possible (even if it's a little misguided due to where the electricity is generated). 3: Cars are expensive. Personally I would prefer to spend that money on airline tickets and take public transport to move about.

  • Rich Wang

    It's pretty simple: driving is an awful experience filled with the stress of bad drivers, traffic, fines, upkeep costs, danger and liability. The roads and freeways are increasingly filled with aggressive, impatient, and unattentive imbeciles in cars that blind with misaligned headlines or obstruct your vision with body lifts and I go out of my way to avoid dealing with them. I would rather ride a bicycle and take public transit or pay for a Lyft in all situations involving travel under 50 miles. Over 200 miles I would rather fly. This leaves a very limited range of applications for owning a car. As a millennial, I am also part of a generation that has suffered through the hellish inanity of suburban sprawl and will forever appreciate the joy and convenience of living in a compact metropolitan city where cars are completely unnecessary. If automakers want my attention, they should look into building light, compact, cost-efficient, all-electric personal transport devices, not gas cars.

  • I think it's because they already have a freedom that the rest of us didn't have. Technology. They are probably lacking the need/desire because they already have access to the whole world. Everyone turns to their social network. They've reduced the craving for human contact. And like the other person mentioned...you can't use your phone in while driving!

  • Cola Richmond

    It's INSURANCE pricing youth out of the market in the UK. Insurance premiums for the under 24 yrs olds are crazy. The average cost is £3000 a year. That's usually 5 times the cost of their first car!

  • Upsilon Arts

    When walking or sitting on public transport you can still use a device, or read, or interact online, can't do that driving a car!!!

  • My city is not very walkable at all. So I do need a car, more or less - but that's still not to say that I'm going to buy a new one and finance it. That's a lot of what I think young people are getting away from, and for good reason. I can buy a new car for what, $20-30K for a low-end one, and add that to my $98K of college debt, plus watch its value depreciate precipitously while I end up paying more in interest than it was ever worth.

    Or, I could buy an old diesel wagon on Craigslist that's converted to run on waste vegetable oil and gets 30-40 miles to the gallon for cents on the dollar. Less than $2K investment. Which is, incidentally, what I did.

    Am I evil for picking a car that's worse on emissions to save myself money I don't have, or am I being resourceful for reusing something already-existing, minimizing my purchase of fossil fuels, and not buying one of those new cars the market is already oversaturated with? I have no idea, but it seemed like an obvious choice to me.

  • Money likely has a lot to do with it. Around here (Toronto, Canada) estimates to own and operate a car for a year fall in the $8K to $12K range. Even a luxurious data plan won't cost you one tenth of that.

    But even if finances are in fact the reason for the decline, car companies should still be worried. Because once people reach adulthood and learn that it is possible to live without a car, they may never become drivers. Instead they learn to prioritize their rental or real estate decisions to live near transit, and they get in the habit of walking and using the occasional car share. Then by the time they're 30 or 40 and established, the idea of plunking down $10K per year for their own car seems wasteful. Instead they vote and advocate for better transit and bike lanes, creating a virtuous cycle where cars become even less necessary. Only those who transitioned right from childhood to adulthood behind the wheel of a car believe that there's no other alternative.

  • John Wojewidka

    Ah, were it so easily black and white.

    A combination of many things, economic and otherwise, has created this change:

    1. No comparison between a monthly car payment and what it takes to keep a phone.
    2. More Ms are attending school, which - if nobody has been watching - costs more than ever.
    3. More chances and ways to connect using personal tech (though, still not substitutes for being there).
    4. Acceptable alternatives for urban transportation, including better buses, walking routes, trains and bikes, and using one car to gather up a few friends to meet.
    5. The true cost of car ownership is high, overall. Parking, fuel, insurance, repairs all factor in.
    6. The car landscape has been changing into something very different from even just 20 years ago. What is considered, now, a status symbol is far more expensive than before in relative terms, and moves much quicker than ever. Last year's 328i is so 2013!

    I wouldn't put much weight on that maturity idea, BTW...

  • Daren, how do you feel that you are contributing to this world by helping car manufacturers sell more cars?

    You are good with words. Maybe you should think about the reactions to your actions.

  • The auto industry needs to stop thinking about how to sell more cars and start thinking about how to sell the opportunity to drive when we need to. Whoever corners that market will make a lot of money - so far Google's self-driving cars are in the running.

  • There are pretty beautiful and good walking routes and public transit in my city, so why should I own a car? Earlier it was a sign of freedom, but now it's commitment to a thing which will serve you more than 3 years + the fuel and maintenance costs. I would call it the commitment for life. Look around - people change things fast these days and they get bored of the same stuff easily, because there are so much to pick from, why would they want to have the same car for several years especially, when there are no significant advantages and only huge fuel costs and pollution?