Baby boomer auto execs + Gen Y car buyers = dysfunction
Cellphones and Facebook, but not cars
Are mainstream automakers losing touch?
Automakers would like nothing better than a return to ‘normal’ auto sale’s levels, or around 17 million units sold per year, but are such sales good for America? Are they sustainable heading into the future, a future ever more controlled by Generation Y?
Today, pickup truck sales – and US automaker profits – are back, but this isn’t really the future is it?
Today, Gen Y’ers aren’t in a rush to get a drivers licenses or a car, and when they do buy, they have very different expectations.
“Many analysts credit Ford with doing the best job so far. The company recently released a new version of the Fiesta that has plenty to appeal to Generation Y: A sticker price starting at $13,320, combined gas mileage of around 33 miles per gallon and, perhaps most important, up-to-date technology for things like voice-activated music search and audible text messages,” reports a recent MSNBC article.
Still, its F150 pickup trucks, not the Fiesta, driving Ford profits.
Nevertheless, unlike past generations, this new generation of consumers is much more concerned with properly maintaining their social network rather than the image their car portrays. More important, they are not willing to invest as much in their cars as past generations – the image value of a car is losing value, rapidly. For Gen Y’ers, image value is attained through social networks, not autos. Besides, the need for new cell phones and high end data plans are cutting into car budgets.
For now, however, automakers can try to appeal to baby boomers, and the huge profits they provide, one last time – this is the audience baby boomer auto executives and corporate boards understand. Yet, another big gas spike could easily squash such sales, cut capacity suddenly, and push automakers back into the red.
The Gen Y generation seems to understand this, and that’s a good thing.
Besides, car ownership in America is dysfunctional. Too many buy far more than they can afford. In my hometown of LA, for instance, we’d rather spend a mortgage payment on a cool looking car and insurance than own a home – I guess that’s why the government isn’t afraid to end the mortgage interest deduction. Home ownership is so passe. It doesn’t lead to rapid enough consumerism.
But even in car crazy LA, ever more Metro routes are reducing the need for a car and the subways are filling up with Gen Y’ers enjoying their social networks rather than stressing out in traffic. We still have a long way to go, but change is happening.
Next week, the LA Auto Show will feature more hybrid and electric cars than ever – the cheapest being twice as expensive as what Gen Y’ers care to spend. Ironically, I’d bet that emerging markets – the future engine of the world’s auto industry – will more resemble Gen Y’ers rather than baby boomers. Unfortunately, automakers seem bent on squeezing every last nickel out of baby boomers as they can for as long as they can. Even most hybrids and EVs are being built for this generation, not Gen Y’ers.
But this is not the future of the US auto industry, or the world’s auto industry, I’d bet. And the longer US automakers wait to address this inevitable reality, it won’t just be social security that retires with baby boomers, but an ever bigger chunk of the US auto industry as well, at least in terms of US manufacturing. But, since that has nothing to do with either next quarter’s financial statement or baby boomer retirement plans, I guess this will be just another mess Gen Y’ers will have to clean up.
And I think a lot of people have the same take as you Florence, which is why I believe that auto-drive could be a game changer.
Essentially, you could have a transportation pod – cost based on ammenities, etc. – that could drive you anywhere taking the longest, shortest, quickest, safest, etc. route that you prefer. the car would communicate with satellites and other cars and know exactly where the traffic is and isn’t. shoot, you don’t even have to see the outside world. instead, you could watch the latest episode of whatever you watch, play a game, answer your e-mail, write a report, or update your Facebook profile.
and while that still might not entice you and many others, i think it will be very enticing, especially to the younger generations whom are so consumed by playstation, facebook, etc. – and you know even greater social networks are inevitable. i think many gen y’ers would love to play the latest version of Call of Duty on the way to work or school rather than deal with traffic.
while i’m neither a Gen Y’er nor a Facebooker, i’d gladly give up LA traffic for such a transportation pod, especially if it offered much cheaper, but just as convenient transportation costs. ultimately, the traffic is bad enough, but the significant amount of inconsiderate, dumb-ass drivers is what really kills me. i’d take up facebook if it mean i could let a computer take care of those jackasses!
yeah, that sounds like the airport shuttles we have around here. I’ve taken one once, but i can take the subway to a central station then catch an express bus to the airport. that’s usually how I get to the airport.
convenience regarding buses. if i had to possibly wait 5 minutes to catch a bus, sit on the bus for 10 minutes than possibly then wait another 10 minutes for the train, it’s just not as easy and i wouldn’t do it as often. in such a situation i would prefer to bike to the subway, it would be faster and they have bike lockers at the stations. on the other hand, i take a two block walk to the subway and i can pretty much take care of any errand, plus hit quite a few entertainment spots. nevertheless, the buses are actually pretty nice – definitely more enjoyable than when i was a kid without a license.
I guess the it all boils down to this; I am so anti-social I would pay ANY price not to have to sit in a car, bus, metro or spaceship with any other people. I just like being in my own space. I don’t want to be surrounded by “other people” and see them or hear them etc
dollar vans are private enterprise – essentially private taxis that allow multiple passengers so each trip is define in terms of the passengers who are on board.
on the bus – you got close.
Why do you not take the bus? Why would you have not ridden Metro if you had to take a bus to get there?
Florence-
There are a number of self-driving cars out there. Google, GM, many universities, etc have put hundreds of thousands of road tested miles on these vehicles with few incidents. It will still probably be many years before they hit the real world, but who knows.
Dollar vans. Not sure, kind of like the airport transport vans? if not, i haven’t heard of them.
Subway is expensive to build, especially in LA, but I still think it’s worth it, especially long term (although auto-drive makes me wonder a bit), and when they connect that too the high speed rail going to San Francisco and Vegas, it will be awesome. I often take the subway from my house to Union station, hope on the Amtrak to San Diego, and take the trolley out to watch the Chargers and return home. For me a car is almost irrelevant.
In terms of the bus, however, I don’t take it much, but it is considered one of the best systems in the US, as well as the cleanest. In truth I’m just very lucky. I’m about 2 1/2 blocks from a Metro Station, and I can go simply hit too many places to have to worry about the bus. Still, occasionally I will get off the train and take the bus a short distance, but its not a very common thing for me. Sadly, if I had to rely on the bus to get to the Metro, I probably wouldn’t be as big of a subway fan.
I’m not sure I’m hitting your question. Please feel free to ask me more about this.
One more – have you ever heard of Dollar Vans?
Hey a question for you Dach … (not on Facebook either BTW)…..
Subway is expensive and takes a long time to expand and I often hear that bus transit (using hybrid technology) is how we cover what subway does not cover.
Do you ride bus transit?
What is your (honest) opinion of bus transit especially with regard to it being a future part of LA’s mobility options?
thanks!
I think that the public transportation in Los Angeles is probably far superior to the one in OC. OC is very spread out and it would be a bit counterproductive to take the bus here; it would end up taking a lot longer than driving.
I guess I’m too old to be a GEN-Y’er, in what category are cool single people in their late 20’s and early 30’s who are into tech and internet, social networking like Facebook etc? I myself am not into FB but I know lots of people who are. I am sure it takes up a lot of time since I see people on there who have 800 friends etc. So now what determines social status is how many friends you have on FB??
I read somewhere that there is going to be a car that can drive by itself. I don’t remember the name of the brand (I think its Honda but not sure) but that would allow gen-x’ers with money to still social network but not have to physically drive.
I agree with recession hitting gen’yers. I have cousins who graduated UCLA and USC recently and still looking for jobs.
Well, I started taking the Goldline Metro after 9/11 simply because I became a bit of a fanatic on the issue. Over time, however, I began to realize that I would prefer to take the subway rather than drive. I put on my headphones, take out my SmartPhone and enjoy my trips here and there. I seriously wish that the subway went more places in LA. If it did I’d probably sell my car and join a car share, and I’m not even a social network junky. In fact, I don’t even have a Facebook account and I might never get one.
However, when I’m on the train, it seems everyone else is on Facebook, or doing their homework – many riders are high school and college students going to PCC and USC. Likewise, many are on Laptops or playing PSPs – all more enjoyable than traffic. Good public transport – if you have access – is simply more productive, plus it usually incorporates some exercise. Likewise, I meet up with friends on the train and we go happy hour hopping, for instance, worry free and cheaper than parking costs alone.
For others, however, according to what I’ve read, the recession has had an impact on Gen Y. Additionally, projecting image is different amongst this cohort. Certainly, driving a nice car makes almost anyone feel a bit nicer. Still, gen y’s image is much more bound to their social network, rather than their car or brand. If you’re not a big Facebooker that might seem hard to understand, but I’m around some big time Facebook junkies and its unbelievable how much time Facebook consumes. I think its a waste, but such social networks are beginning to define many Gen Y lives much the same way cars defined previous generations.
Consequently, I believe that auto-drive is going to be huge technological revolution. Let a gen y’er time share a self-driving transportation pod that provides cheaper commuting than owning, while offering great social and internet networking capabilities, and i think a huge percent would care less about a driver’s license.
dahcredyns,
Do you have an idea why Gen Y’ers are supposedly not as much interested in owning a status car compared to the previous generations? I am really curious as to know to the exact reason why, apart from the oil dependency issue.
I agree that Socal is a different breed, but the fact is that around SoCal you NEED a car to get around; public transport sucks. If you have to drive anyways, you might as well drive a car that looks good and represents you. No?
Even if public transport was acceptable, personally I don’t like sitting around with other people, I like the privacy and space of my own car. I need my space and my distance away from other people…
Image is definitely more paramount here, probably more so here than anywhere else in the US. Nevertheless, the statistics are pretty clear. Licensing and car ownership are declining within this age cohort and the brunt of Gen Y hasn’t yet really hit.
Certainly that doesn’t mean many in Gen Y won’t embrace cars, even luxury cars, but they’ll embrace less cars and less luxury cars relative to previous generations.
Thus, auto sales might pop back up, but it wouldn’t take much to drop them back down to today’s levels, which are barely above the baseline. If, for example, a gas spike hits in a few years and auto sales drop back below 11 million units per year, the US auto industry would go bankrupt again if sales stagnated at around just 10 million units for any period of time.
That might not happen. It might be years before another gas spike. Maybe the economy is primed for big gains. Maybe.
History, however, seems to suggest that the problems associated with oil dependence, particularly foreign oil dependence, are increasing in pace. Couple that with changing demands and it wouldn’t take much to put the US auto industry back into the red.
I’m at age 32 barely in the gen-y bracket but I will put in my two cents. I am a very tech savvy person and always “on-line” but not really into the social network thing since I’m more introverted. Personally, I drive a CLK 320 Benz and I love luxury cars and status items, even though I realize my car is not up there in the Benz food chain.
My next car will be a newer benz or BMW. I actually live in Orange County, CA (similar to LA) and status is huge either. I know a lot of people who are in their late twenties or even early THIRTIES but living at home with their parents but then leasing a brand new Mercedes. Image is sill paramount here and always will be, I think.