If Chuck Berry was a Millennial, he would probably not be inspired to write the classic cruising song, “No Particular Place to Go.” Just as the economy is spinning its wheels, so, too, are young people in their teens and 20s idling in neutral when it comes to getting their driver’s licenses and buying new cars, according to a new study with implications not just for the auto industry but for the economy as a whole.
The U.S. Census Bureau projects that Millennials over the age of 25 will comprise roughly 19% of the U.S. population by 2020, up from just over 5% in 2010. Unlike baby boomers, whose generation-defining car culture has been immortalized in such Top 40 hits as “Fun, Fun, Fun” and “Hot Rod Lincoln,” Millennials are taking a back seat when it comes displaying love or loyalty for automobiles, according to a recently released annual study by AlixPartners, a global business-advisory firm.
The auto industry has been one of the driver’s of the economic recovery. Vehicle sales accounted for half of the 2.2 percent increase in the first-quarter gross domestic product. But the stalled economy and the sputtering job market, along with a generational shift toward more auto-apathetic Millennials could put the brakes on the auto industry’s performance.
The 2012 AlixPartners Automotive Outlook estimates there are five million fewer potential car-buyers than five years ago, and that U.S. auto sales will be a conservative 14.3 million units. Millennials aren’t interested, and boomers are driving less and holding on to their cars longer, analysts observe.
So what’s the deal with Millennials and cars? “It’s long been a truism that if people don’t have jobs, they don’t buy cars, John Hoffecker, managing director at AlixPartners and head of the firm’s Automotive Practice, said in a statement. A recent Associated Press report found that half of new college graduates are either unemployed or are under-employed. The AP also reports that fewer than three in 10 teens in the U.S. hold a summer job from June to August, making the lowest level of employment for those ages 16 to 19 years-old since World War II.
But beyond being able to afford a car, not to mention the prohibitive price of gas and car maintenance, Millennials do not feel the primal connection to driving that boomers experienced growing up. For these consumers, getting a license is not the same rite of passage. The federal government’s National Household Travel Survey reveals that between 2001 and 2009, the average number of vehicle-miles traveled by people ages 16-34 dropped 23 percent.
More than one-quarter of Millennials (26 percent) did not have a driver’s license in 2010, up five percentage points from the decade before, Yahoo News reports. More eco-conscious Millennials also tend to ride bicycles and take public transportation, a habit aided by smartphone and computer applications that make it easier to schedule rides or map out routes.