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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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131 Comments

  • Douglas Stansfield

    It doesn't get any better if you factor in Uber and the Tesla Model III that is totally self driving. You just program your app on your phone to pick you up when you want to leave, the driverless car shows up, you get in and get to work, and repeat. Why bother with Upkeep, insurance, getting tickets for accidentally going by a cop too fast in a speed trap, etc. I'm looking forward to not owning any cars and I'm 50. The day I can reliably just app myself a ride will totally change and I say good bye to car payments and and everything else that goes with them. In the mean time, I'm driving Electric. At least I got rid of gas already!

  • Steve Thornton

    Wait, I can lease a Civic for $25 a month? That's what I pay for my cellie, on Ting.

  • Greg Costikyan

    Go millenials. This 56 year-old has commuted by bicycle for 20 years, and continues to do so in a North Dallas 'burb, where it ain't easy. Screw cars.

  • dicks

    Henry Ford recognized that he needed to pay his employees a wage that lets them actually buy the car they're making. Fast forward to 2015 and we're back to the days Upton Sinclair wrote about of corporations raping their workers, again. You want people to buy your vehicles but you don't want the national economy strong enough to support them? I hope your company economically burns to the ground, car companies. Also - your commercials SUCK.

  • Steve Corradi

    theres also the long list of crap were left to clean up. mostly the environment. and everyone would agree that people owning individual vehicles is a waste of resources. car sharing programs are going to be the way of the future. someone else takes care of maintenance and insurance. we get to use a car when we want it.

    cars are less an extension of self these days as we are deeper and deeper in debt to get jobs that pay less and less. cars are money holes. my parents have been telling me that since day one. i had a car for 1 year. brokest ive ever been. the reason we dont share our phones is how full they are of valuable information, memories, and our access to our world. i can tell you that my phone actually feels like a part of me, if i dont have it i am physically bothered. many of us grew up with the internet and generally require it. i dont have cable i have internet. all my news comes from the internet.

    presently cars are expensive single function tech. needs to upgrade.

  • Steve Corradi

    not enough space to finish up there

    also our populations are moving more and more into urban areas with (generally) effective mass transit systems. theres no need to own a car when we stay out all day. usually end up drinking by the end of it, then have to leave it parked at some expensive parking garage downtown overnight.

  • Traci Roberti

    When I was a teen turning 16, we had driver's education for free. Now, before a teen can even buy a car, insurance, etc. they have to lay out around $800 just to get their driver's license. Car manufacturers should spend more money on getting teens their driver's education back than on advertising. Once a person is comfortable behind the steering wheel, it's difficult to sit in the back seat.

  • Mander Twothousandtwo

    The baby boomer generation and earlier are spoiled in having it easy to get a driver license - no GDL , no tricky knowledge tests, just pass 1 basic test and you are good to go. The DMVs are making it much harder to get a driver license than 30 years ago. Although I somewhat sympathasize - too much traffic jam and parked cars crowding up streets in big city, air pollution, accidents caused by outrageous or drunk older people....etc. I suspect we will have to wait until a good chunk of the older generations die off, along with their cars, before they scale back the tests to more reasonable and passable levels, and have better road conditions for the future generations to drive on. Then again, maybe it's better if cars become obsolete - and rely on jetpacks, hoverbikes,.... etc. who knows what the future holds. Let the DMVs / officials who impose these increased difficulty screw themselves out of a job, haha.

  • PetesCycle

    After riding a scooter for two years, I decided it was finally time to step up to the big leagues. I did some online research and ended up choosing Motorcycle Riding's Cool to teach me the ropes. I had a really great time learning to ride, I never felt unsafe and I met some other like minded people along the way. The instructors are clearly well versed in riding, but are also uniquely diverse in their experiences. I had three instructors, who can best be described by the bikes they ride; Harley, Ducati, BMW. It sort of says it all, but you'll get it once you meet them. The lessons are really invaluable, the safety tricks as well as riding tips really help out. When it came time to taking my test (which I chose to take on location) I passed without dropping a single point. I was pretty happy about that. I rewarded myself with a Ducati Monster 1100 Evo a few days later, and a week after that I took a trip from Chicago to Cleveland and back over the following weekend. What a fun ride!

  • TheLondonDude85609

    Something needs to be done to make driving what it was in the past; an experience, the road to freedom etc.

    As for self-driving cars/Uber/car-sharing, they're considered to be, and excuse my French, a "f*ing joke" to us British.

    Very few Brits will put their money where their mouth is and actually drive a self-driving car, despite the fact some say they would.

    Cars still are a popular thing, but, amongst older people, although there is work to be done on making the cool to teenagers again.

    About the only people who seem to discuss cars are geeks, nerds, or autistic people (yeah, well, transport is a common interest for autistic adults, so I've read on the blogosphere)

    TheLondonDude

  • TheLondonDude85609

    How do you get people back into cars again? How do you make cars aspirational, not a tool? People are more enthusiastic about buying gym equipment than a car!

    This is the challenge for manufacturers and society.

    Oh, and as for self-driving cars, here in the UK, they're a f*ing joke amongst us British, few people actually would put their money where their mouth is and have one.

    TheLondonDude

  • Tad Chen

    I don't get it. "Car" is not a topic of conversation, "Car" is a boring thing. People do buy cars, just like buying eggs from walmart, they don't want to know what is an oil change. Driving is no longer a enthusiastic thing, it's just a tool that takes you from point A to point B. There's no difference between a Honda Civic and a Lamborghini.

  • bryan.ramey

    For me, I will never buy a new car ever. Why should you? After the first year, they depreciate almost $8,000. Almost every car built in the past 15 years are exceeding 200,000 miles. You can also purchase extended warranties and make the car practically new again. Only 5 out of my network of 300 friends that I know have moved to urban cities like Sanfran, New York and DC so they can walk or ride bikes to work so that they will never need to buy a car.

  • I'm 35 and have never once owned a car. I'm actually looking at maaaybe getting one right now, but I would never pay more than $1500 for one. Cost to buy-in plus upkeep is just too much. Sales are down not because of Tech, but because of work pay-rates and rent costs being so disproportionate that the costs of a car are just too much to be fit in. Let's see you make $11 an hour and manage $1400 in monthly rent and do anything else other than survive.

  • dicks

    Exactly this. Same age, same response.

    I ride my bike and take public transit. If I really need a car there's Lyft or a rideshare.

  • Darren Ross, you make a few mistakes. Firstly, typical American, you assume the whole wide world reacts the same as your country. Secondly, in my country, as in many other developing economies, kids haven't the public transport choice. You want to get to the beach, the mall, the gig, you've got to have wheels. Thirdly, you lightly mention the fact that the so-called millennials are quite happy to interact through tech and not physically, as though it is a perfectly fine thing. THAT is where I see the biggest problem - the insular, cocooned life millennials live, hooked up to a machine. That is near sociopathic. I cannot believe for the life of me that such insular, small world lives are in any way good for anybody. You can throw stones at anybody, it does not help cursing the baby boomers or laughing at their lifestyles. And I am not one.

  • robbfoerster

    You have to factor in not only whether you can afford a car but also if you'll have enough left over to enjoy it. I did a cheap run down of a Nissan Note...and after all is said and done it would cost $800 a month before gasoline. Well great... I have transportation but that's over $8000 a year out of my budget. Money that would have been spent on home, savings, retirement and/or "real" vacations on planes to lavish locations. ;)

    And personally, the freedom of a car is countered by the very thing you have to do to use it. - hours of driving. Sorry, my idea of a vacation or freedom is not spending hours on roads...emmmm....what a relaxing start to my holiday! ;)