Auto makers are worried about the Millennials. They just don't seem to care about owning a car. Is this a generational shift, or just a lousy economy at work?



Kids these days. They don't get married. They don't buy homes. And, much to the dismay of the world's auto makers, they apparently don't feel a deep and abiding urge to own a car. 

This week, the New York Times pulled back the curtain on General Motors' recent, slightly bewildered efforts to connect with the Millennials -- that giant generational cohort born in the 1980s and 1990s whose growing consumer power is reshaping the way corporate America markets its wares. Unfortunately for car companies, today's teens and twenty-somethings don't seem all that interested in buying a set of wheels. They're not even particularly keen on driving.

The Times notes that less than half of potential drivers age 19 or younger had a license in 2008, down from nearly two-thirds in 1998. The fraction of 20-to-24-year-olds with a license has also dropped. And according to CNW research, adults between the ages of 21 and 34 buy just 27 percent of all new vehicles sold in America, a far cry from the peak of 38 percent in 1985. 

At a major conference last year, Toyota USA President Jim Lentz offered up a fairly doleful summary of the industry's challenge. 

"We have to face the growing reality that today young people don't seem to be as interested in cars as previous generations," Lentz said. "Many young people care more about buying the latest smart phone or gaming console than getting their driver's license."

The billion-dollar question for automakers is whether this shift is truly permanent, the result of a baked-in attitude shift among Millennials that will last well into adulthood, or the product of an economy that's been particularly brutal on the young. 


There are plenty of reasons to suspect the latter. The Millennials have become notorious for delaying, or entirely skipping, the traditional markers of adulthood. But as my colleague Derek Thompson has argued, that's largely because the economic milieu that shaped their parents' and and grandparents' lives has disappeared. How can you buy a home when you're underemployed and saddled with student debt? Why would you want to after the horror of the collapsing housing bubble? And why would a 25-year-old woman get married when so many of the men she knows are out of work, while she's financially independent? 

Collectively, the Millennials still have a tremendous amount of spending money. But although they may have been synonymous with youth culture way back in the 20th century, cars are extremely adult investments -- exactly the type twenty-somethings tend to shy from now. Even a bottom-tier Kia Sedan will run you $12,000, not counting the monthly cost of insurance, repairs, and filling up on $3.90-a-gallon gasoline. If there are reasonable, nearby alternatives to owning -- say, paying for a Zip Car membership, or taking the subway -- why commit to the expense? 

Of course, Millennials are more likely than past generations to live in an urban community, and this may be part of what terrifies car markers. About 32 percent reside in cities, somewhat higher than the proportion of Generation X'ers or Baby Boomers who did when they were the same age, according to a 2009 Pew Research Center report. But as the Wall Street Journal reports, surveys have found that 88 percent want to live in an urban environment. When they're forced to settle down in a suburb, they prefer communities like Bethesda, Maryland, or Arlington, Virginia, which feature plenty of walking distance restaurants, retail, and public transportation to nearby Washington, DC. 

If the Millennials truly become the peripatetic generation, walking to the office, the bus stop, or the corner store, it could mean a longterm dent in car sales. It's doubly problematic if they choose to raise children in the city. Growing up in the 'burbs was part of the reason driving was so central to Baby Boomers' lives. Car keys meant freedom. To city dwellers, they mean struggling to find an empty parking spot. 


GM is hoping that the right car, at the right price, can solve these challenges. According to the WSJ, the company has appointed a 31-year-old marketing executive named John McFarland as its "youth emissary" to try and turn cars back into the sorts of attractive toys that can compete with smart phones and tablets in the Millennial consciousness. During the North American International Auto Show in Detroit, he told the paper:  "You hear [Millennials] don't have money. They do and there is potential. You just have to have a product that gives them exactly what they want."

The company has also retained MTV Scratch, a consulting group owned by media conglomerate Viacom dedicated to teaching brands how to appeal to today's youth. As the Times put it, "The strategy is to infuse General Motors with the same insights that made MTV reality shows like 'Jersey Shore' and 'Teen Mom' breakout hits." Here's a taste of their method:

On a recent Tuesday morning in the General Motors Technical Center, which was designed by Eero Saarinen, a couple of car executives huddled around a "persona board" in the color and trim laboratory.

They studied a collage loaded with images of hip products like headphones created by Dr. Dre, a tablet computer and a chunky watch. The board inspired new Chevrolet colors, like "techno pink," "lemonade" and "denim," aimed at "a 23-year-old who shops at H&M and Target and listens to Wale with Beats headphones," said Rebecca Waldmeir, a color and trim designer for Chevrolet. This rainbow of youthful hues will be available on the Spark this summer. [Bold is my emphasis]

Despite the gross generational stereotypes at play -- Wale, seriously? -- the experimentation seems to be producing some early results. At the Detroit Auto show, GM debuted two interesting concept cars, styled attractively to look like sports cars, but also fuel efficient and relatively inexpensive. 

Actively catering to the Millennials has proved tricky in the past, as Toyota learned with its Scion brand. The Scions were inexpensive, edgy-looking, and easily customizable. They promoted them at indie-rock concerts and with artist tie-ins. And their sales fell to 49,000 in 2011, from 173,000 five years earlier. Moreover, many owners were actually cost-conscious baby boomers who liked the cars' youthful halo. 

Perhaps GM will have more luck. But if city living and the economy persuade Millennials to embrace a car-free lifestyle long-term, chances are that a lemonade- or denim-colored paint job won't change their mind. 


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