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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]