The Evolving American Dream: Why Millennials Don't Buy Cars
Jacob Davidson has written an interesting article for Time entitled, "10 Things Millennials Won't Spend Money On". Among the things the current 14-34 year old generation won't lay out cash for or put on credit are mass market beer, bulk warehouse club goods, weddings, homes, and cars, he writes.
The beer issue has to do more with personal taste choices. Davidson notes that 43% of millennials say craft brewed beers taste better than the mainstream bottled by the likes of Bud, Coors and Miller. 50% of them have drank craft beers versus 35% of the overall US population.
On the other hand, the avoidance of the Sams Clubs of the world is more related to the evolution of the 'American Dream' as it's been preached over the last half century. For various reasons having to do with economics and attitudes, they aren't buying into it. To benefit from patronizing a big box store, you need three things: a large family, a large home, and an automobile, preferably an SUV or minivan. Virtually none of this applies to many Millennials. They are, as a group, marrying far later in life than their earlier cohorts. Where 48% of Baby Boomers married between 18-32, only 26% of Millennials had married by that time, according to Pew Research.
So, if you're single, who needs a house? Even if you are married, only 42% of Millennials say they plan to have children. That's down from 20 years ago when it was 78 %. Davidson notes that…
"It’s not that millennials don’t want children (or homes, or weddings, or ponies), it’s that this whole recession thing has really scared them off any big financial or life commitments. Most young people in the above study hoped to have kids one day, but didn’t think their economic stars would align to make it happen."
It's the economics of the time that are holding a lot of these kids back. I'll bet that tall, trim, bright young man with the Brompton folding bicycle, with his messenger bag on his shoulder, and a sack of groceries in his hand, likely has a college degree. If he does, he is also saddled - assuming he's the average 2014 college grad - with around $33,000 in college debt, more depending on which state his school is located in.
As Davidson points out, studies show that Millennials would like to have kids, a home, maybe a car someday, but they are constrained by economic reality: they can't afford them. Increasingly, they also don't see them as that important, especially the home in suburbia and the car(s) that life requires. Their attitude towards television watching illustrates this. It's number one on David's list of ten things they don't buy.
"The average American still consumes 71% of his or her media on television, but for people age 14-24, it’s only 46%—with the lion’s share being consumed on phone, tablet, or PC. Many young people aren’t getting a TV at all. Nielsen found that most “Zero-TV” households tended toward the younger set, with adults under 35 making up 44% of all television teetotalers."
If you're not watching television, you aren't being bombarded by an endless stream of car commercials, so you aren't being manipulated into the car buying cycle. And since you can't afford a home in suburbia and, instead, live in a urban apartment, you really don't need a car to get around. Quoting the Atlantic, Davidson writes:
"In 2010, adults between the ages of 21 and 34 bought just 27 percent of all new vehicles sold in America, down from the peak of 38 percent in 1985."
This may account, in part, for Bill Ford, Jr.'s recent OpEd in the Wall Street Journal in which he states in the title, "We Can't Simply Sell More Cars."
Ford's executive chairman and the great-grandson of its founder, writes that his industry needs a "change in our view of the car as an individual object to seeing it as part of our broader transportation network."
"It also requires a fundamental change in how we think about transportation," he notes, presciently observing…
"Forward-looking companies will redefine themselves and move from being just car and truck manufacturers to become personal-mobility companies. We will be thinking more intelligently about how the vehicles we build interact with one another and with a city's infrastructure, which includes trains, pedestrian walkways, buses, bikes and everything else that helps us move through urban centers."
Urban centers also just happen to be where many of those Millennials find themselves, either by choice or economic necessity, which may help explain why Ford Motor Company recently partnered with Dahon, makers of a similar folding bicycle to the Brompton in the photo, as well as with Pedego on offering Ford-branded electric bicycles.
It seems not a little ironic that Henry Ford's first 'automobile' was, in fact, called a 'quadricycle' because it was built largely from bicycle parts.
So, even for Ford, the America Dream is evolving, just as it is for the Millennials who are now America's largest demographic group. Jacob Davidson observes in the subhead to his article, "By 2017, millennials will have more buying power than any other generation."
Figuring out how to cater to their needs and wants will, as Ford notes, present both a challenge and an opportunity.
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