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Connectivity, Mobility Schemes Response to Millennial Indifference

Connectivity, Mobility Schemes Response to Millennial Indifference

Automakers looking to connect with younger buyers will have to face up to a new mobility reality. Many of them already are.

The widely reported indifference of tech- and social-media-savvy Millennials to the automobile as a status symbol arguably is overstated, with the biggest factor in that age group’s seeming disinterest in purchasing new cars having more to do with lack of employment opportunities as a result of the most recent financial crisis.

Nevertheless, the fact is many saw their parents struggle to hold on to their homes and cars through the financial crisis, and in conjunction with rising property costs they undoubtedly have become thriftier and more debt-averse.

Furthermore, smartphones, social media and life experiences have become more important to younger consumers and have further diminished the status of the car. In response, automakers increasingly are promoting the connectivity of their vehicles and embracing the sharing economy rather than standing idly by like their parked-up cars.

Although attractive finance deals and low fuel prices helped boost demand in many markets in 2015, it’s difficult to envision any particular model or segment luring current and future younger generations back into driving in a significant way.

Whatever the magnitude of this indifference and its impact on new-car sales going forward, automakers consciously are seeking to engage with Millennials by marketing the ever-increasing connectivity offered by new cars.

As a case in point, Ford showcased its updated Sync3 system and Kuga CUV at the Mobile World Congress in Barcelona and reiterated its intention to be both an automaker and mobility-solutions provider, as it had announced previously at such events as CES in Las Vegas, the Detroit auto show and last year’s Mobile World Congress. This increasing representation of automakers at consumer-electronics shows is a noteworthy trend, especially in the context of the traditional motor show concept seeming to struggle.

For example, the Leipzig auto show, which was intended to fill the gap in years the biennial Frankfurt auto show does not occur, has just been cancelled due to a domino effect of automakers declining to participate.

However, aside from promoting the increasingly connected aspects of new cars, automakers are also turning their attention to alternative mobility solutions to car ownership such as car sharing (essentially short-term car rental), ride sharing (schemes such as UberPool and BlaBlaCar) and peer-to-peer car-sharing. The concern over reduced car sales that is expected to occur as a result of households utilizing such alternative mobility solutions for short journeys and reducing multi-car ownership if not dispensing with car ownership altogether, certainly has been a catalyst for OEMs to introduce their own car-sharing schemes – such as BMW’s DriveNow and Daimler's Car2Go – as an alternative way to get cars on the road.

Automakers also are collaborating with players such as Uber or introducing their own peer-to-peer car-sharing schemes, whereby owners can rent out their cars. BMW, General Motors and Ford, for example, already have ventured into this territory.

This offers car buyers the opportunity to earn money from their investment, which otherwise would spend most of its time idly parked, and thus addresses the thrift and debt-aversion elements mentioned above.

Ford also has pledged to triple investment in the development of driverless cars that naturally not only would benefit from being fully connected but, ironically, lend themselves well to being shared rather than owned.

Automakers then could be seen as contributing to their own demise, but as consumers inevitably approach mobility differently, it is those who ignore the burgeoning sharing economy and stand idly by, like their parked-up cars, that surely are in the greatest peril.

Neil King is an automotive analyst for London–based Euromonitor International, a strategic market research firm with offices around the world.

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