Recent research by the University of Michigan’s Transport Research Institute has shown that the number of American households making do without a car is on the rise and has been so for the past seven years.
Starting in 2007, Professor Michael Sivak of the university found that 8.87 per cent of American homes didn't have a car. More significantly, that number has been steadily rising, and in 2012 (the last year surveyed) it stood at close to 10 per cent, 9.22 per cent to be precise.
The data becomes even more worrying for the major global car companies when you leave aside the national average figure and instead start looking at the individual cities.
Locations such as New York, Boston, San Francisco and Chicago are key demographic indicators, not just for car makers but for anyone selling any kind of product.
The sheer number of people living in this large cities, allied to the fact that you have to be pretty well off just to survive within them, means that they are not just consumers, they are consumers who dictate through market research what the rest of us will consume. And they’re not buying cars.
In 2012 New York city reported 56 per cent were doing without a car; Washington DC 38 per cent, Boston 37 per cent, Philadelphia 33 per cent, San Francisco 31 per cent, Chicago 28 per cent and Detroit 26 per cent.
“American households without a vehicle have increased nearly every year since 2007-providing further evidence that motorisation may have peaked in the United States” said Prof Sivak. “The proportion of households without a vehicle is likely influenced by a variety of factors. Examples of such factors include the quality of public transportation, urban layout and walkability, availability and cost of parking, income and price of fuel.”
While some of the increase since 2007 can probably be ascribed to the global financial downturn, as hard-pressed families give up a car simply because they can’t afford the cost, the issue of cars becoming less and less appealing to younger buyers has been emerging as a trend for some time now.
It’s usually referred to as the Millennial Problem. Millennials, or Generation Y or whatever you want to call the current crop of up-and-coming twenty-somethings just seem to be less and less interested in buying a car. The number of 16-35 year olds in America who aren’t bothering to apply for a drivers licence is also on the rise, and has hit a current peak of around 20 per cent. Conventional wisdom has it that Millennials are far more obsessed with high-tech toys such as smartphones and tablets - technology that’s vastly more affordable than even the cheapest car.
For now, for car makers (at least those operating in a truly global capacity) can afford to relax about the issue simply because the vast, largely-untapped markets of east Asia are offering such bountiful potential spoils. The Chinese car market swelled to a record (and globally leading) 20-million units last year, and shows few signs of slowing down. This is, let's not forget, still a country where outside of the major cities grinding rural poverty is the norm. As the spread of the middle class across China accelerates there will be more and more able to afford a car.
For markets such as the US or Europe though, where the market is mature to the point of stagnancy, the issue is of rather greater import. If car makers can't convince the next-generations of buyers that their products are desirable, then the market slump of the past five years could start to look like an automotive walk in the park.
Those car makers do think that they can turn around perceptions though. John McFarland has been appointed by General Motors asa 'youth emissary' and when he spoke to the Wall Street Journal at the recent Detroit motor show, he spelled out the problem in pretty simple terms: "You hear Millennials don't have money. They do and there is potential. You just have to have a product that gives them exactly what they want."
Perhaps the launch of the Citroen C4 Cactus last week gives us a peek at just how the car makers intend to ensnare buyers of the future. It's mechanically simple, spacious and looks funky and has been designed from the get-go to be the best possible automotive pal for your smartphone or tablet. Connectivity has become as important a word at new car launches as understeer or double-wishbone once was.
Most crucially of all, Citroen knows that cost is the biggest factor keeping younger buyers out of the car market, so it has worked hard to trim the C4 Cactus’ weight, emissions and consumption in order that its running costs can be kept as low as possible.
That way, it can tailor its PCP personal leases to deliver maximum car for minimal cost, describing its future car buying plans as much more like the mobile phone plans that everyone signs up to without a backward glance. That perhaps will be sufficient to bring the Millennials out of the Apple Store and into the dealership.
And if it’s not…?
