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Are Millennials Killing The Car Industry?

Where have all the drivers gone? Something shifted with regards to our driving behaviors during the mid 2000's and we simply started driving less even though the population continued to grow.

Are Millennials Killing The Car Industry

So many different factors may have contributed to this decline: economic factors, gas prices, family dynamics, people working from home, and changes in air travel activity. General family dynamics have changed as well - younger people today simply don't need to go as many places as we needed to at that age - their connected lifestyle has changed the entire concept of ownership and the need to physically go somewhere to acquire something is different. Want to buy something? It's simply a click away.

Consider this statistic: Today's 20-something Amercians drive approximately 20% less today that their parents did while they were in their 20's.

The question remains though, what happens when this segment of the population ages, moves out of their parent's houses, enter the professional workforce and start their own families? They will eventually need vehicles. And when they do enter the market it could create a much needed buying spree. Or, will their historical activities and future needs create a new standard of automotive shopping behavior and disrupt the retail industry even further?

The projections for the future see three possible scenarios, according to a research report from The Frontier Group and the US PIRG Education Fund. These scenarios could vary between: Drivers will re-enter the market and driving will pick up to near-normal levels, drivers will continue to maintain current activities and the trend will be an enduring shift or there will be a full reversal and driving will continue to decline. One contributor to that decline may be the introduction of ride sharing services like Uber, ZipCar and other companies providing cost effective, convenient ownership alternatives. The Frontier Group is quick to point out that all three of these scenarios predict the future outcomes to be below the anticipated historical trend line.

So, regardless of where the trends actually fall dealers will be faced with a different marketing challenge: Connecting with a segment of automotive shoppers who have different needs and an entirely different experience with online shopping and ownership.

 

Kelly Kleinman

No way, just the TV as an entertainment platform.

William Phillips

As another option, possibly their laziness has produced less of an ability to purchase?  I want to be a think tank that gives enough possibilities that one has to be right.   Reality is coming to the Millennials, and that can be taken to the bank.  

Derrick Woolfson

I would offer that the "millennial" buying patterns and trends can be analyzed by location. Namely, previous generations lived in more suburban/rural areas. Whereas, it is evident that "millennials" tend to prefer urban areas. In which case they can walk or use public transportation. Another huge impact is the "student loan" issue where many of them could be paying as much as $4-500 per month on their student loans. Add $1,200+ in rent it could be a bit tricky. Another concern, too, is their lack of budgeting or inability to manage their finances. Look at their average credit score. It is not pretty.  Personally, I could not survive without a vehicle. That sense of freedom is invaluable to me. I also commute. But then again, not the average "millennial" as I much prefer a suburban area, and own a home. 

Patrick Bergemann

Millennials are reaching a point where they'll regain their buying power. Student loans are an undeniable issue for their financials, but there's also a huge difference in the way they communicate.

They look for convenience and empathy. So many dealers are trying to force every shopper to buy the dealer's way. Most shoppers will deal with it and badmouth the experience to everyone they see, but a millennial would have no problem just avoiding the process all together. They'll blame the color of the car as a reason not to buy instead of pointing out that they see countless cosmetic scratches that could have been buffed out.

The fact of the matter is that in a transparent digital world, connecting to consumers is the key to earning their trust. If price and numbers actually mattered more than emotions and feeling, the commercials with a dealer yelling "rockbottom prices" in the middle of their lot would actually work.

AdWeek did a study of how empathy creates a positive brand experience that makes sales easier due to a personalized, friendly experience for the user. A dealership in Phoenix created a buying experience around millennial shopping trends to connect better.

Even the SVP of Customer Experience for Drive Motors stated he doesn't want to buy a new car because he doesn't want to go through the hassle of the buying at a dealership and HE'S IN THE INDUSTRY!

Reality isn't coming for Millennials. It's coming for dealers. Adapt to new standards of omni-channel business or get acquired because you're stuck in your ways and blaming problems on generations and external factors.

Jason Volny

William Phillips, I have worked and currently work with hundreds of millennials. I would argue that They aren't lazy, they just have different priorities, and owning cars just doesn't seem to be high on their list.

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