June 18, 2012 – Vol.17 No.14
CARS VS THE SOCIAL NETWORK.
by Bruce Mulliken, Green Energy News
Car makers have nothing to worry about. Their future is secure. The world is a big place. It's population is exploding. There will always be more car buyers next year than this. Globally car sales are set to grow forever with only minor hiccups with the occasional economic downturn.
But that's the global picture. On the national level the picture is different, particularly here in the U.S., the land of cars. Here car sales are growing because of pent up demand as the economy drags itself out of its economic ditch. For the most part it's Baby Boomers buying cars and trucks, not its echo generation.
According to a study from the American Association of Retired Persons (AARP) and auto industry experts J.D. Power, people over 50 now account for a whopping 62.3 percent of new car sales. Ten years ago those over 50 made made up only 40 percent. In 2011, 5.6 million cars were sold to consumers older than 50, while only 1.2 million cars were sold to consumers between the ages of 18 and 34: The so-called Millennial generation, Gen Y, the Boomer Echo.
Overall the two generations are nearly the same in size about 72 million surviving Boomers and 70 million of the Echo.
It's not directly age or the accumulated wealth of Boomers that's making them buy cars and the Millennials not. It's because for the first time in decades car makers have serious competition: The social networks.
For Boomers, perhaps more than any other generation in their younger years, cars were a key ingredient in a social life. Cars identified who you were. Cars were status. Those with cars had more fun. Cars made possible parties, hanging out, getting together, working, connecting, romancing. Cars got people into trouble.
Now the connections, the network, is electronic. There's no need to be there physically as the only way to meet, chat, hang out and play. Much of the time the cyberspace of the Internet will do. The status symbol today is the latest smart phone or tablet with the best apps.
Yet it's more than connecting through websites and computers smaller than a hand that's keeping Millennials out of the car showroom and onto the screen of their smart phone. It's sheer cost. In dollars and cents and common sense, the world of motoring has gone too far. Car ownership has gotten way too expensive. Smart phone ownership is not.
Boomers, in their youth, could buy a used car for a few hundred dollars (perhaps even much less) and fix it themselves. A new set of spark plugs and points, a carburetor tune-up and the car car was good to go until some other problem turned up. (Which was often.) Those who couldn't fix a car had a buddy that could. For those with real skills a junker could be brought back to life, made stylish too.
Today a serviceable car is a few thousand dollars. Gas that was pennies a gallon in Boomer early days is now dollars. Computer controlled engines and other equipment mean a trip to a shop for what could be a minor adjustment.
Cars are more complex today as well. In Boomer days air conditioning was rare. Cars had manual steering, not assisted and putting a window up and down was, for the most part, a turn of a crank.
The cost of fuel, complexity, electronics and amenities have not only added to the sticker price, but to the long term ownership of cars. On total cost of ownership alone the Millennials may be saying NO to cars as they keep a curious and skeptical eye on the aging Boomers. "Why,” they think, “would anyone spend tens of thousands of dollars on this thing that loses money the minute it leaves the dealer lot, then for years costs many more thousands in fuel, maintenance, repair and service? Car ownership seems kind of stupid. Their are other alternatives to owning."
According to a study in late 2011 by car sharing service ZipCar:
• 55 percent of Millennials have actively made an effort to drive less, compared to 45 percent in the same 2010 study
• 78 percent say owning a car is difficult due to high costs of gas and maintenance
• 53 percent would participate in a car-sharing service, like Zipcar – mobility and convenience is still important
To Millennials as well, there's the clear connection between cars, environmental decay and global political strife. They know the ice caps are melting and car exhaust is contributing. They read the news online and have noted the direct connection between wars and oil.
Car makers have been trying to attract younger buyers by adding features such as handsfree smart phone connections. But older buyers are snapping up the cars instead.
Other forms of transportation have already caught on to this potentially seismic shift away from cars. Airlines offer flying WiFi service. Bus companies offer dramatically reduced fares and Internet connection on the road. Smart phone apps can announce when the next city bus will arrive.
Altogether, the shift away from car ownership coinciding with the retirement of Baby Boomers, might turn out to be planet savers. Baby Boomers won't drive as much as when they retire. They‘ll seek better fuel economy in their retirement cars. They'll move to areas where driving isn't important. They,too, will embrace social networking as a way of staying connected with friends and family.
Will Millennials, as they age, embrace cars the same as Boomers? Car companies hope they do. If they do the cars they will buy will be far cleaner and more efficient than what Boomers grew up with.
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