Generation Y and Automobiles
December 26, 2008
Blake Thorne's new post over at Campus Progress contends that the Big Three automakers are struggling to appeal to Generation Y; which, frankly, isn't anything shocking. It is true that young people have less brand loyalty than anyone else, and it is true that fewer are willing to pay a premium for American goods, and it is true that foreign auto companies have simply done a better job creating models that appeal to young people. Thorne's analysis, however, assumes that young people will continue buying cars at the same pace as older generations, but that they will opt for different brands. In light of the fact that Toyota's sales are plunging and other foreign manufacturers are struggling, that assumption may simply not be true.
When my dad bought his first car, it was more than just a means of getting around, it was a status symbol.Generation X Previous generations built their identities around the cars they drove. They grew up in urban neighborhoods or inner-ring suburbs, but they were in no hurry to move anywhere but increasingly auto-dependent communities. On the other hand, Ward's, an auto trade publication, has this to say about Generation Y:
Some will point out that young people have been graduating with piles of debt for years and purchasing cars anyway. Of course, one has to consider how many of those cars were purchased with additional piles of debt, and if lenders can continue to be so fast and loose in the future. Car-sharing, another concept that didn't exist during my parent's generation; is proving to be wildly successful in the cities where it exists, and with marketing targeted at Generation Y, the business model is poised for additional growth.
Most of the political debate and congressional hearings are being conducted by Baby Boomers who don't seem to understand the implications that Generation Y will have on the domestic auto market. The problem isn't merely a trade-off between brands, it is a problem of demand destruction affecting the industry as a whole. The stakes have changed, both fiscally and ideologically, and few seem to have noticed. The long-term viability of the entire auto industry rests on the very individuals who are least interested in supporting it - and that is a much bigger problem for the Big Three than dwindling brand loyalty or manufacturing vehicle models that actually appeal to younger people.
When my dad bought his first car, it was more than just a means of getting around, it was a status symbol.
In other words, the children of Baby Boomers do not aspire to vehicle ownership like we did. Instead of daydreaming about buying a Ford Expedition they can use for camping trips with friends and family, many Millenials may want to rent the big SUV for just the camping trip, Pipas explained. The vehicle is just another element of the experience, not the foundation for it. The next weekend they might rent a canoe.Not only is the shift in preferences ideological, as more young people prefer cities over suburbs and car-free over car-ownership; for many young people, they simply can't afford new cars. When my parents went to college, they had to pay little, if anything, and carried almost no debt upon graduation. Most thought they could depend on Social Security to help with retirement, so a big proportion of what they earned became instant disposable income; and one of the first things on the wish list was a new car. The New York Times recently reported that the cost of college has increased 439% between 1982 and 1997, significantly outpacing income growth, and most of it has been financed with debt. It doesn't help that most young people have lost faith that they will get anything from Social Security, so saving for the future is now an individual responsibility.
Some will point out that young people have been graduating with piles of debt for years and purchasing cars anyway. Of course, one has to consider how many of those cars were purchased with additional piles of debt, and if lenders can continue to be so fast and loose in the future. Car-sharing, another concept that didn't exist during my parent's generation; is proving to be wildly successful in the cities where it exists, and with marketing targeted at Generation Y, the business model is poised for additional growth.
Most of the political debate and congressional hearings are being conducted by Baby Boomers who don't seem to understand the implications that Generation Y will have on the domestic auto market. The problem isn't merely a trade-off between brands, it is a problem of demand destruction affecting the industry as a whole. The stakes have changed, both fiscally and ideologically, and few seem to have noticed. The long-term viability of the entire auto industry rests on the very individuals who are least interested in supporting it - and that is a much bigger problem for the Big Three than dwindling brand loyalty or manufacturing vehicle models that actually appeal to younger people.
You have a great point!
So many indicators, in my never humble opinion, point towards an ever-growing number of common Americans trending towards a 2nd-world lifestyle level.
Thus, car ownership is becoming an expense many commoners can not afford.
Of course, all is well within the USA since MILLIONS of illegal aliens are here to continue driving down wages for the working-poor citizens and America's elite class are amassing ever-more wealth and power.
obbop I don't see Americans trending towards a 2nd-world lifestyle unless you think living car-free or car-light is 2nd-world. It seems we are rediscovering urban living. Things like walking to work, taking transit, enjoying public places, having a third place aren't 2nd world they are urban.
I think it's possible to exaggerate the differences between the folks that are in their early 20s today and everyone older. Trust me, we old fogies don't necessarily love the personal gas-powered vehicle concept all that much, but most people see no way to have a decent life without one. Once you get to the point where the vehicle is a more or less obvious necessity, you start thinking about what kind of car you want and what kind of car you can afford. I'll agree that those things can and will change, and that can obviously have a big effect on the car market, but it's the fact that personal vehicles seem so necessary that drives the demand. The personal desire for vehicles may decrease, and that maybe can provide demand for overall modes of living that don't require as much personal vehicle use, but even that is at best going to induce a very slow decrease in the actual necessity for a vehicle, I think.
obbop, I agree with Dave Reid on your concern and will add that the attitude that everyone must own a car less they be a second class citizen is the attitude that created the mess we are in right now.
B. P. Beckley, these posts about generational differences can be vague when it comes to the behavior of certain generalizations. It's obviously false to believe that every member of Generation Y, even a majority of Generation Y, isn't going to buy a new car at the same pace that previous generations did. The problem for automakers is that they, more or less, rely on growth for their survival, so even a small drop off in the demand for autos could have big implications. I agree that the eventual shift in demand will be slow - probably at first driven by individuals and eventually (if ever) by public policy.
This is a very poignant argument. I think it's also interesting that infrastructural costs supporting the Cold War-era urban planning policies that favored the automobile were not considerable issues in our parents' generation. Running electricity and water (not to mention roads) out to suburbs and exurbs is the norm, and this heavily subsidized practice comes from that same veneration of the automobiles. It has also contributed greatly to the financial problems young adults now tend to inherit.
Dave Murphy, thanks for stopping by, I enjoy your work over at GGW and Imagine, DC. At some point there will be a generational shift in the country's leadership. Unfortunately, until then, I'm afraid of what additional damage the pro-sprawl generations might do.
I'm in my 30s and I've never owned a car that cost more than $3,000. I've always paid cash and not had many mechanical problems - maybe a few hundred dollars a year's worth. Owning a used car is really not such a large expense.
On the other hand, the few walkable areas of most cities are so expensive nowadays (because they are so rare) that the privilege of NOT owning a car becomes a large expense. The car-free lifestyle is something I aspire to, but I cannot yet afford to move to an area where that's feasible. I don't "venerate" my car but at this point it is an unfortunate necessity. I don't see this changing for most people unless housing near quality transit somehow becomes more affordable.