Millennials Remain Critical to the Industry, Automakers Say

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Bloomberg News

Young peo­ple – Mil­len­ni­als between 18 and 34 years of age – are buy­ing cars at a slower rate than their par­ents, but automak­ers con­tinue to chase after them.

Find out why Mil­len­ni­als are so crit­i­cal to the auto industry.

Young peo­ple are buy­ing cars at a slower rate than their par­ents, restrained by mount­ing stu­dent loan debt, a ris­ing cost of dri­ving and an increas­ing reliance on bik­ing and pub­lic trans­porta­tion. Car com­pa­nies con­tinue to chase them, bank­ing on the hope that today’s car-shirkers will be tomorrow’s car-buyers.

They are try­ing to attract the 18-to-34-year-old mil­len­nial gen­er­a­tion through a blend of social media cam­paigns, video game place­ments and peer-to-peer adver­tis­ing. It’s the 21st cen­tury equiv­a­lent of putting a Hot Wheels car into a box of Frosted Flakes.

“This audi­ence is their future,” said Michelle Krebs, a senior ana­lyst at Edmunds.com. “It’s absolutely crit­i­cal that automak­ers try to get this mar­ket now.”

For automak­ers, the mar­ket­ing expense is a down payment.

“It may be a long-term endeavor to appeal to younger dri­vers because a lot can’t afford new vehi­cles now, but they will a few years down the road,” said Ed Kim, an indus­try ana­lyst at AutoPa­cific Inc.

Michael Sivak, a research pro­fes­sor at the Uni­ver­sity of Michi­gan Trans­porta­tion Research Insti­tute, has found a shift in the peak age of vehi­cle buy­ers — from 35-to-44 in 2007 to 55-to-64 in 2011. That trend could be here to stay and spend­ing mar­ket­ing dol­lars on mil­len­ni­als may be mis­di­rected, he said.

Krebs, of Santa Mon­ica, California-based Edmunds.com, dis­agrees, say­ing that early evi­dence shows that the rate of mil­len­nial car pur­chases may be pick­ing up. The 18–34 age group fell from 14.5 per­cent of new-car reg­is­tra­tions in 2008 to 10.6 per­cent in 2011 before rebound­ing to 12.4 per­cent last year, accord­ing to R.L. Polk & Co. The gain last year out­paced all other age groups, and mil­len­nial buy­ers are con­tin­u­ing to come back this year, Krebs said.

 

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