Gen Y Presents New Challenges for Automakers

Over the last decade or so, the Internet has had a transformational effect on the media, airline and hospitality industries and now automakers are feeling its impact as well.

Once a rite of passage for every red-blooded American youth, the automobile is becoming increasing less important to the under-thirty population.  In 1978, almost half of all 16-year-olds in the U.S. had their driver’s licenses.  By 2008, the percentage of 16-year-old drivers had fallen to only 31% and data compiled by the Department of Transportation shows the most dramatic decline has occurred since 1998.

Although Census data shows the percentage of the U.S. population between the ages of 21 and 30 increased from 13.3% in 2001 to 13.9% in 2009, they are accounting for fewer and fewer miles driven. In 1995, 21- to 30-year-olds in the U.S. accounted for 20.8% of all automobile miles driven. In 2009, the demographic accounted for only 18.3% of miles driven.

William Draves is the president of the Lern consulting firm and co-author of “Nine Shift” which examines how our lives are being dramatically changed by technological advances. The company’s Web site states: “The term ‘nine shift’ is used to describe the great changes taking place in our lives right now. What we are experiencing in how we use our time and how we experience life derives from the phenomenon that nine hours in your day will be spent entirely differently in 2020 than they were spent in 2000.”

Draves predicts that total mileage driven in the U.S. by all segments of the population will decline by 50% by 2020.

According to Draves, today’s digital media and advanced technology is significantly changing the way we think about the automobile and making mass transportation a much more desirable option for many in the under-30 age group often referred to as “Millennials”.

As activities like texting and surfing the Internet increase in importance, Draves claims that driving is increasingly seen as an unnecessary distraction. The Internet and mobile communications devices have also resulted in increasingly greater numbers of telecommuters among the age group.

A higher degree of environmental awareness among the under-30 age group is also causing members of the so-called “Generation Y” to drive fewer miles.

As the importance of online activities has grown in importance to Gen-Y-ers, the time needed to conduct those activities has also grown in importance. “You can work on a train. You can’t work in a car,” said Draves, “And the difference is two to three hours a day, or about 25% of one’s productive time.” CEO Brian Wiegand said of Millennials, “Their first thought is not ‘let’s drive to the store to get these things,’ but ‘let’s get them the easiest, fastest, cheapest way.’ We call them internet-first people. We think that’s an important segment for us, and it’s also the biggest segment for our iPhone app.”

Ford Motor Company’s global trends and futuring manager Sheryl Connelly said “There are a lot more toys out there competing for the hard-earned dollars of older teens and young adults.” To compete for those dollars, Ford developed the popular Sync hands-free communication technology. She admits, however, that automakers face a much larger challenge than simply being first-to-market with the latest must-have “toy”. Connelly said, “I don’t think the car symbolizes freedom to Gen Y to the extent it did baby boomers, or to a lesser extent, Gen X-ers.”

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