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Millenials and Automotive: Why do we care?

By Posted on July 12, 2016

Jean Redfield
President & CEO

I need to open with the caveat that I am NOT an expert from the auto industry. What I am is a provocative thinker, and through my role as CEO of NextEnergy in Detroit, Michigan, I have had the pleasure of working with many of you in a variety of ways. Hopefully what I have to say about millennials will be interesting, or at least provocative, to those of you in the trenches.

First, let’s start with a definition of millennials. Just like baby boomers or Gen Xers, it’s a name used to describe a generation or “cohort” of people, but the exact birth year range that constitutes millennials is somewhat ambiguous. Some say millennials are those 16-35-year-olds born between 1980 and 1999, or maybe between 1983 and 2000. It varies by source, but most agree that the term “millennials” is intended to mean individuals who reached adulthood around the turn of the 21st century.

Two attributes that most people do agree upon when it comes to millennials are:

1. Millennials are “digital natives”, meaning people who have lived only since the digital age. They have no significant history or experience before PCs, cell phones or the Internet. Consequently, they are the most connected, and the most marketed to generation to ever exist.

2. Millennials are “coming into adulthood”, and as adults, they represent the next generation of purchasers, if you are a marketer trying to sell something; the next generation of workers, if you are in business trying to attract and grow talent; or the next generation of leaders, if you are concerned about our collective future. Likely, this is why there is so much talk about millennials happening right now.

Another reason for all the millennial chatter is that, quite simply, there are a lot of them. This Millenial Week infographic shows, 92 million in the US and 1.8 billion worldwide.


So we’ve established that millennials matter. The question I want to address here is why do they matter to the auto industry?

The millennial buyer
One way they matter is as buyers. There has been a lot written lately, much of it vacillating between handwringing and cheerleading.

On the handwringing side, a recent article from the Chicago Tribune cites:

“Americans drive fewer miles per year — down about 9 percent over the past two decades. The percentage of 19-year-olds with driver’s licenses has dropped from 87 percent two decades ago to 70 percent last year.”

Why this disconnect with driving and cars is happening is very much subject to interpretation. Some say it’s a need for simplicity, some cite the economy (fewer job opportunities and therefore less money for those coming of age during the recession), some say it’s a concern for the environment, or simply that the prospect of driving interferes with their connected lifestyles.

Consequently, many in this generation have found other ways to get around including biking, public transit, Uber or ride sharing.

In a recent Goldman Sachs survey of US Millennials, only 15 percent say the purchase of a car is extremely important, and as many as 55 percent do not view a car purchase as a big priority, or do not intend to purchase a car.

On the cheerleading side: according to a recent Autotrader study, “Millennials are the most diverse, most educated, most socially conscious and most tech-savvy group the world has ever known. As more and more hit their career stride, their shopping needs and preferences will drive the market and make-or-break car manufacturers.”

I think both the hand wringers and the cheerleaders miss the boat on two fronts when it comes to understanding millennials as buyers.

First, we keep talking about how millennials will or will not be buying cars, essentially the same stuff their parents bought. I think they are more likely to be buying “experiences” or “trips” or “mobility solutions” which the industry can provide. For example, our vision of the future of connected/automated/ autonomous cars may be perfect for the millennial that says “give me an environment where I can be productive or connect with my friends or access entertainment, just don’t make me drive.” Or car sharing and ride sharing options perfect for the millennial who wants a vehicle that suits a particular purpose: a small, easy to park car for the city, a low emission vehicle for longer trips. And both of these “mobility solutions” involve the purchase of an experience vs. the purchase of a car. This will require big changes from the auto industry, with its long history and investment in selling cars.

Second, we keep focusing on the US market—which by the way is ONLY 5 percent of the millennials in the world, and you can bet that non-US millennials are even more open to mobility solutions that work better for them economically, culturally, and in terms of energy and land use than personally owned autos. So figuring out how to sell mobility to the 1.8 billion millennials on the planet will be a market opportunity for somebody. And I’m betting on us here in the U.S.

The millennial worker
The second way millennials matter to the auto industry is as workers. Deloitte just released its


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