Will Hipsters Buy Cars?
NEW YORK (MainStreet) -- Zachary Gayle, an unemployed 18-year-old in New York City, says he doesn't have enough money to buy a car--not that he's bothered by the fact.
"If I had the funds, I would not get a car," he said. "A car is, like, the worst thing you can invest in. You buy it, and it just loses value immediately after you drive it off of the lot...I'm not going to buy a car, probably ever."
With Millennials increasingly moving to cities and scaling back expenses, they are more commonly of Gayle's mindset and doing without vehicle purchases. Add to that the rise of car-share and p2p programs, and auto companies are left grasping at straws to try to get through to a cohort that increasingly eschews its offerings.
"Millennials are really savvy about blocking out marketing messages," said Sheryl Connelly from Ford's Global Trends and Future team who led a panel discussion this summer called 'Hipsters Hate Cars.' "They've grown up with all this technology, and they know Internet ad-blockers and RSS feeds...so it's much harder for a traditional marketer to reach them."
Plus, getting a license used to be a rite of passage and the true milestone of independence. Not so much anymore with less enthusiasm around the mobility and independence a set of wheels can offer.
A third of all licensed drivers in the U.S. were under 30 in 1983, a figure that's dropped to 22% today despite the 80 million strong Millennial population, according to University of Michigan's Transportation Research Institute. Even the miles driven plummeted: those between 16 and 34 years old averaged 10,300 miles annually as recently as 2001, a figure that dropped to 7,900 annually come 2009. And forget about teens: whereas 69% of 17-year-olds were licensed back in 1983, only 50% were in 2008.
The initial sunk cost is not chump change: driver's education, once free, now costs between $200 and $800, and to add a teenage driver onto your insurance policy can cost upwards of $2,500 a year--not to mention the $30,000 average for a new car. But that hefty premium alone can't explain this pattern of Millennials who are balking at the prospect of driving.
Social Media Transportation
One contributing factor to this trend stems from the fact that 41% of Millennials in the U.S. want to live in cities, where public transportation and bike sharing programs reduce the need for a personal automobile. What's more, people are able to connect through social media instead of in-person, making the acquisition of the car less a rite of passage.