Engaging Journeys, Engaged Journalism

The Road Not Taken

Lukewarm about cars, young consumers pose a marketing riddle for automakers

You’ve gassed her up, you’re behind the wheel, with your arm around your sweetheart in your Oldsmobile . . .

—Tom Waits

If you were in the business of selling a popular dream—say, freedom, status, and mobility—and you began to notice your customers’ dreams shifting elusively, as dreams do, into something quite different from your product, what would you do? For automakers, the answer seems to be wake up, quickly, and smell the soy latte.

Young people—I’ll pass on the stereotypical “millennials” or “generation Y,” which evidently stands for humans ages 16 to 34—aren’t as keen to own cars as their parents and grandparents were. Not too surprising, automakers are very, very interested in this trend. Cruising down the boulevard is no longer the essential rite of passage it once was. Today’s young show a marked preference for the sort of mobility smart phones can provide rather than what internal combustion engines offer.

“We have to face the growing reality that today young people don’t seem to be as interested in cars as previous generations,” said Toyota USA president Jim Lentz at the Automotive News World Congress way back in 2011. “Many young people care more about buying the latest smart phone or gaming console than getting their driver’s license.”

Here are some facts you can be sure automakers are looking at:

  • In a wide-ranging survey of brand and commodity preferences for young people, not one car brand ranked in the top 10.
  • 46 percent of drivers aged 18 to 24 said they would choose Internet access over owning a car.
  • In the United States, available cars already outnumber licensed drivers.
  • Just 31 percent of 16-year-olds had their driver’s license in 2008, down from about 42 percent in 1994.
  • People in their late 20s and early 30s are less likely to have a driver’s license now than people of the same age in 1994.
  • The percentage of new cars sold to 21- to 34-year-olds hit a high of nearly 38 percent in 1985 but stands at about 27 percent today.

Facing reality

Their preference for gadgetry aside, there’s another giant and pervasive reason behind this trend: the moribund economy. In many respects it weighs more heavily on the indebted young than on older adults, who entered the workforce at a time when the future sparkled with dollar signs. The trend then was to live outside urban centers, commuting by car to fetch essentials and get the kids to school.

Hot cars, wealth, and beautiful young women go together like bread and butter, marketers have always believed. (photo by Mustafa Khayat)

Hot cars and beautiful young women go together like bread and butter, status seekers and like-minded marketers have always believed. (photo by Mustafa Khayat)

Today’s newly fledged adults live in a very different world. They have come of age during a recession, and owning a car is simply not a high priority; they are expensive, and so is the gas that goes in them. New laws requiring driver training add to these costs and dampen the ardor for getting a license as soon as possible. Breaking into the workforce and paying down college loans come first.

The most reasonable way to do that without a car is to live close to where the jobs are, which pretty much means a city unless you plan to be a sailor or cowboy. The young, along with retiring Baby Boomers, are part of a general migration back into revitalized urban centers, where mass transit is affordable and easy to use, thanks in part to real-time transit data provided by phone apps. Riding a bus certainly beats paying for stashing a car in the city. Besides, you can dive into your favorite device when someone else is driving.

For those times when a set of independent wheels are needed, there’s the increasingly popular option of car clubs like the international Zipcar or local car-share schemes within cities.

Or course, outside urban centers and in the vast stretches between Nowheresvilles in the western United States, some sort of transportation is a must, whether it’s a car or a horse. In fact, Dave Cole, former chairman of the Center for Automotive Research, thinks that as young people hit their middle-age strides with families of their own, they may find cars more of a necessity than a nuisance.

A likely scenario? Yes, but when The Economist lets slip terms like “saturating trend” and “peak car,” you have to assume automakers are sitting up and paying attention. How are they responding to all this?

Back to the drawing board

For the short term, there are still millions of consumers in Asia eager to get behind the wheel. In 2010, for example, car sales jumped 17 percent in Indonesia. Figures like these indicate that automakers will continue to be busy for a while. But closer to home, they have turned their attention to research and development in a trial-and-error attempt to figure out how their future consumers tick.

Toyota has focused on the Scion FR-S as its chief ambassador to the indifferent young. Happily for the top automaker, the Scion seems to have recovered from a tepid consumer response in 2011 and gone on to win Cars.com’s Best of 2013 award for its styling and affordability. The Scion emphasizes individuality with its five different body styles and personalized accessory options. There’s also the “Pure Price” sales approach, where the car’s advertised price is the one you ultimately pay. This simplifies the buying process and helps reduce the confusion and unease for first-time buyers.

And, of course, new owners can log on to the many Scion forums and social hangouts sponsored by Toyota.

Good-humored spoofs of the hot babe-hot car connection have become a hot commodity. (photo of The M&M Race Car and M&M Girl by The JH Photography)

Good-humored spoofs of the hot babe-hot car connection are also hot marketing commodities. (photo of The M&M Race Car and M&M Girl by The JH Photography)

GM has taken a different route. It’s trying to shift an entrenched culture from within the auto industry itself. Last year the automaker consulted with Ross Martin, executive vice president of MTV Scratch, an offshoot of Viacom that helps brands connect with consumers. During this pow-wow, everything from affordable models (Chevrolet’s Sonic, Cruze, and Spark passed muster), to the creepiness of traditional hard sales and test driving with a stranger, to dashboard technology was examined.

If pursued diligently enough—and GM has hired John McFarland, a 31-year-old marketing executive to do just that—this strategy might indeed bring about a switch in direction. But a culture doesn’t change overnight, and some of this effort will be slowed by the standard three-year lead time for car designs. It’s unlikely we’ll be seeing proposed new colors like “techno-pink” and “denim” on the roads any time soon

Boldly going

Ford seems to be splitting the difference between its chief competitors, changing both its approach and its engineering. Its Fiesta has received the most attention in terms of youth appeal, including an affordable price, decent gas mileage, and spanking new Sync technology that enables voice-activated music searches and audible text messaging.

However, Ford has also made the bold move of opening a research lab in the heart of Silicon Valley, where it proposes to mastermind not just new automobiles but what it’s lavishly calling “uncompromised personal mobility experiences.”


Will “uncompromised personal mobility experiences” and other vehicle innovations eventually convince these boys that getting a drivers license and buying a car are essential for the good life? (photo Object of Attention by CarSpotter)

“Ford has an incredible heritage of driving innovation in the transportation and manufacturing sectors during the past 107 years,” says Paul Mascarenas, the company’s chief technical officer and vice president of its research and innovation arm. “Now it’s time to prepare for the next 100 years, ushering in a new era of collaboration and finding new partners to help us transform what it means to be an automaker.”

Ultimately, the lab will be part of an “innovation network” that stretches from Ford’s Advanced Design Studio in Irvine, California, to its Redmond, Washington, office where designers are working with Microsoft, its connectivity platform partner.

One of the automaker’s more startling—and laudable—decisions has to do with research transparency. Working with New York startup Bug Labs, Ford is launching OpenXC, a platform that will give developers access to vehicle data to help design cloud-based apps and services. The automaker is also looking at ways to use the many sensors in vehicles to improve the road for all drivers and is sharing these data channels with developers.

“Ford integrates technologies, software, and electronics at the same pace as the most innovative companies in the world—our platform just happens to be the car,” says Mascarenas.

Brave words in a brave new world for automakers.

Taran March is editorial director at Northern California’s own Quality Digest magazine, a digital business daily. A 25-year veteran of publishing, March has written and edited for newspapers, magazines, book publishers, and universities. When not plotting the course of Quality Digest Daily with the team, she usually can be found clicking around the Internet in search of news and clues to the human condition.

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