From Macleans:

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To say Detroit is feeling good again is an understatement.  … But there was at least one aspect of the industry that wasn’t being celebrated, or even much talked about: the growing number of young people who couldn’t care less about cars, regardless of their specs or styling. …

… the biggest factor appears to be the absence of an emotional connection to the growl of a V6 engine or the plastic smell of new upholstery.  … “If you look at a car as a means of establishing one’s freedom, the competition has gotten much stiffer,” says Ken Wong, a marketing professor at Queen’s University.

MAC03-charts2 … And while there’s some evidence to suggest older Millennials, now approaching their early 30s, are finally venturing into dealers’ showrooms because they have families, buying a car because “now you have no choice” makes for a lousy marketing slogan.

Carmakers clearly need a better approach—and soon. Without one, all the cheap gasoline in the world isn’t going to save them. …

The underlying reasons for young people’s automotive indifference are varied. Graduated licensing programs have made it more difficult for teens to jump behind the wheel, with only 46 per cent of 17-year-olds in the U.S. having a driver’s licence in 2012, down from 58 per cent in 2000. But, even as Millennials grow older, there’s evidence they’re increasingly bypassing the idea of car ownership altogether. A recentstudy out of McGill University found young people are far more likely to take public transit than other generations—a decision no doubt driven partly by cost, with youth unemployment in Canada still hovering above 13 per cent, or about double the rate for the country as a whole.

Another oft-cited reason for the growing preference to go carless is the trend toward urban living. …

Perhaps the biggest driver of young people’s changing attitudes—and the one carmakers should be most worried about—is how technology has replaced cars as a cultural touchstone. A Zipcar-commissioned study asked Millennials what would affect their lives the most: losing their cars, televisions, computers, or mobile phones. Only 26 per cent of 18- to 24-year-olds said their vehicles, a response that would have been unthinkable a generation ago. …

If there’s some positive news for automakers, it’s that Millennials aren’t a monolithic group. And, as they grow older and get spouses, jobs and kids, they’re more likely to require a family hauler. A recent J.D. Power report found Millennials now account for 26 per cent of U.S. vehicle sales, beating out Gen Xers for the first time ever. And, interestingly, the carmaker that’s so far excelled at wrangling Generation Y is the same one that created most of the buzz at this year’s show by debuting vehicles most of them couldn’t purchase even if they wanted to: Ford. …  Ford has partnered with car-sharing services on some U.S. college campuses in an effort to have them test-drive their vehicles without realizing it. …

The core problem, Wong argues, is simple economics. Owning a car has never been an attractive financial proposition, once financing, insurance, maintenance, parking and fuel are added into the equation. And now that cheaper and more convenient alternatives are emerging, it seems like only a matter of time before carmakers will have a true crisis on their hands. “If you take out the psychological benefits”—the freedom, the sex appeal—“there’s not a lot going for [the car],” Wong says.

In the near term, Wong suggests carmakers respond by offering buyers rebates for gasoline or parking—gestures that acknowledge the true cost of car ownership. Down the road, however, he argues they may need to consider a new business model entirely. “I think car companies have to stop just being suppliers of cars,” Wong says. “There’s no reason why a car company wouldn’t have a massive competitive advantage offering an Uber-type service or a car-sharing service. They may be able to put themselves in the right place at the right time, instead of trying to constantly force the consumer into thinking the time is right to buy a car.”

 

Comments

  1. The article barely brushes on urban living and city form. Hundreds of condos offered next to rapid transit stations all over the Metro here are snapped up by Millennials – or their parents who will let their grown kids use them – expressly because car ownership is far less important with quality transit so close.

    The assumption that moving to the suburbs for cheaper housing is not often accompanied by a calculation of the higher transportation costs, and sometimes families cannot figure out why they are still struggling after buying a plastic house with greater square footage way out on the edge instead of a two-bedroom condo closer in. And what happens when the princes of the House of Saud give their bejeweled hands a slight twist on the oil faucet and dampen down the supply again? Volatile oil prices have been known to cause recessions. On the other side of the same coin, one upward tick of interest rates will cause waves of angst to ripple through society.

    Perhaps there is a link between lower vehicle km driven and the BC Ferries malady. The ferry system is supposed to be part of the highway system, but with fuel prices even today 250% higher than the Nineties, obviously paying almost $200 return for a subcompact car with two people adds points to the wallet weight loss program. People may have started a long, gradual cascade of ferry revenue challenges as running cars chomps away at family budgets. People still need to move and the Island will always require very good links to the Mainland, so why not start building ferries to move people harbour-to-harbour instead of a thousand tonnes of cars with every sailing?

  2. It should be remembered that there is a difference between having a Driver’s Licence and owning a car.

    Having a licence and knowing how to drive is a useful skillset, even if you don’t use it every day.

    In fact, some jobs will require the holding of a valid Driver’s Licence. i.e. an employer will not want to incur the cost of taking taxis to site or client visits, nor incur the time for the employee to take transit, rather than taking the company car or paying an employee for mileage.

    With the graduated licensing systems now in place, a prospective employee won’t be able to get a Driver’s Licence immediately – so it would be useful to undergo the probation period, etc. while you can.

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