Car ownership rates among young Americans have been low for years, perhaps due to the economy, perhaps due to disinterest, or some combination of both. Yet the auto industry insists that sooner or later, it’ll be time for millennials to take the wheel.
The decline in car ownership, and driving in general, among young Americans in recent years has been well documented. “From 2007 to 2011, the share of sales to car buyers aged 18 to 34 fell nearly 30 percent,” an Edmunds.com report on millennial consumers published last fall stated. Surely, the Great Recession, along with the sorry state of the jobs market and record-high levels of student loan debt among young people, is a major reason for the dropoff.
But there’s also a case to be made that millennials aren’t particularly interested in cars, even if they could afford them. In the years leading up to the Great Recession, the rate of teenagers with driver’s licenses fell sharply. Experts theorized that in the era of Facebook, Twitter, and smartphones, having a car no longer represented the freedom and possibilities for social connectivity it did to previous generations. Whereas an iPhone is considered a necessity by many, a car is more often regarded as an expensive hassle, what with worries about parking, insurance, upkeep, and hefty lease payments.
Understandably, auto insiders have largely refused to believe that millennials could simply not want cars. They’ve been pointing the finger at the economy as the prime reason for the falloff in car ownership among young people. “I don’t see any evidence that the young people are losing interest in cars,” Mustafa Mohatarem, GM’s longtime chief economist, said to Automotive News last summer. “It’s really the economics doing what we’re seeing, and not a change in preferences.”
The results of a new survey from Deloitte back that idea up. “Well over half (61 percent) of Gen Y consumers in the Deloitte report expect to buy or lease a car within the next three years,” Craig Giffi, Deloitte vice chairman, said in a press release, adding that “almost a quarter (23 percent) expect to purchase or lease in the next 12 months – and a mere 8 percent do not expect to ever purchase or lease a vehicle.”
The Edmunds.com millennial report also holds that based on trends in 2012 and 2013, in which purchases among young consumers rose in 2012 before dipping again in 2013, “weaker car-buying compared to previous generations stems from economic constraints rather than from a preference to not drive.” Edmunds.com economist Lacey Plache wrote that because millennial purchases of luxury cars and sports cars have remained relatively high, this demographic indeed does “see cars as more than a means to get around.” What’s more, “Millennial buying choices suggest an interest in cars that will translate into more purchases when economic conditions allow, just as in 2012.”
So it’s the economy, not changing preferences, that is to blame for lower car ownership rates among millennials, right? And loads of millennials will therefore jump behind the wheel once the economy takes off again, right? Well, maybe not.
A study from Michael Sivak of the University of Michigan Transportation Institute explores the idea that the number of vehicles in the U.S. may have peaked back in 2008, and that going carless has increasingly becoming the norm among more households. Here are some of the key data points, as summed up by USA Today:
• In 2012, 9.2% of U.S. households were without a vehicle, compared to 8.7% in 2007.
• In six of the 30 largest U.S. cities more than 30% of households do not have a vehicle.
• From 2007 to 2012, there was an increase in the proportion of households without a
vehicle in 21 of the 30 cities.
No matter if it’s the lackluster economy or lackluster interest that’s caused car-buying levels among young people to fall, automakers and car dealerships know that they have their work cut out for them to woo this all-important demographic—which may not be rich now, but will soon collectively hold the largest consumer spending power in American history. Adding to the puzzle for auto sellers is that young people are not only lukewarm about car ownership, they also hate the traditional car-buying experience even more than other groups.
To draw millennial consumers—and others frustrated with the confusing, time-consuming exercise in futility and aggravation that constitutes car buying as we know it—manufacturers have been trying to make it easier to buy cars online. In some cases, sellers are also calling on millennial-consumer specialists to help win the business of this bunch.
The South Florida Sun Sentinel reported that AutoNation, the country’s largest retailer of new and used cars, just welcomed Jason Dorsey, an author, entrepreneur, and consult known as “The Gen Y Guy,” to speak at a conference and give insights about selling cars to millennials. Among other things, Dorsey said dealerships should forget about connecting to customers via e-mail; texting is instead the way to go. Certainly, don’t call a potential customer on the phone unless fair warning has been given. “Gen Yers consider a phone call an invasion of privacy,” he said.
He also advised salespeople to introduce customers to everyone encountered in the dealership—”It’s like going into a club with someone who is popular,” according to Dorsey. A direct hard sell is discouraged. Instead, he suggests strategically flattering the customer’s ego like so:
The best thing you can say when we’re having a conversation, to increase our trust in you, is: “Wow, that’s a great question.” We can be uncomfortable with face-to-face contact. We may not naturally know to ask questions. When you finally pull a question out of us, that’s what we want to hear.