How will millennials drive the car industry of the future?

Written by on August 31, 2017 in Features with 0 Comments

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Cars and the automobile industry have long been backbones of both the American economy and way of life.

In the early 20th century, Henry Ford had the foresight to envision a process where cars could be mass produced on an assembly-line so that each and every American could own an automobile.

In the post-war era, it was the American-based General Motors Company, commonly referred to as GM, that produced cars on a global scale to become one of the most powerful companies in the world. Understanding its irreplaceable role in the American economy, the U.S. Treasury Department invested nearly $50 billion in GM to save the automobile company after it went bankrupt during the 2009 Financial Crisis.

The automobile industry is constantly evolving, and quite fittingly, never staying still. All one has to do is look at the way it has changed in the past decade. In 2017, we now have self-driving cars, electric cars that run like a computer, and more hybrid vehicles than ever before. Ride-sharing services like Uber and Lyft have done their best to shake-up the industry. And, not too long ago, the now-archaic Hummer used to guzzle gas and hog the road.

In what direction is the automobile industry headed next?

To find the answer, LendEDU conducted a poll of car-owning millennials in which we asked them a series of questions related to their car-habits. Not only are they largest-living generation, but millennials will soon become the most powerful spenders in the U.S. Their spending tendencies will play a key role in deciphering the future of the American economy.

Observations & Analysis: don’t worry, the future of cars looks secure

In today’s world, it seems a new piece of technology comes out everyday that renders a similar, but older service obsolete. But, according to a few questions from LendEDU’s poll, that does not appear likely to happen with the automobile industry.

We asked 501 car-owning millennials the following question: “Do you consider owning a car to be a necessity in today’s society?” An overwhelming majority of respondents, 93.01 percent, said “yes,” while only 6.99 percent of millennials answered “no.”

A similar question immediately followed the aforementioned question with one modification: “In 20 years, do you believe that owning a car will be a necessity?” ​This time, less millennials, 79.24 percent, thought a car would be a necessity, while 20.76 percent believed automobiles will not be a necessity in 20 years.

Albeit a small percentage, it was interesting to see that nearly 14 percent more millennials thought that owning a car will become unnecessary in 20 years as opposed to now. As they have grown up watching new technological advancements wipe out entire industries, perhaps they foresee the same thing happening with automobiles. However, when we asked our poll participants if they think their children will own cars, 93.01 percent of them answered “yes.”

The following question was asked to 501 car-owning millennials: “Do you see yourself buying another car in five years?” 77.64 percent of respondents said they could picture buying another car, while 22.36 percent could not. It was interesting that the results of this question were quite similar to the results of the question in which we asked millennials if owning a car will be necessary in 20 years. Maybe, the automobile industry will slow down sooner than we think, or maybe most of the respondents are satisfied with their current cars and are not afraid to rack up the miles.

The answers we received for one of the poll questions proved that ride-sharing services like Uber and Lyft may be having a moderate influence on the car industry. When asked if the growth in ride-sharing services like Uber have made our respondents re-think car ownership, 16.57 percent of car-owning millennials said “yes.” Although the clear minority, 16.57 percent of millennials re-thinking car-ownership due to the rise of Uber and Lyft is a cohort that did not exist just a few years ago and is nothing to scoff at.

Finally, on to the subject of the cars of the future. We asked the following: “If possible, would you give up manually driving a car if it meant that you could have a self-driving car?”  57.49 percent of car-owning millennials said they could not give up manually driving a car, while 42.51 percent said they would. The results of this particular question were a lot tighter than anticipated and demonstrate the openness many millennials have towards self-driving cars – an openness that is not as prevalent with older American consumers.

This is an excerpt of a longer report by LendEDU, which can be found here.

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