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Old 23rd June 2017, 15:33   #1
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Default The Cheapest Generation - Why Millennials arenít buying cars or houses

Came across this interesting analogy & sharing...

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The company is trying to solve a puzzle thatís bewildering every automaker in America: How do you sell cars to Millennials (a k a Generation Y)? The fact is, todayís young people simply donít drive like their predecessors did. In 2010, adults between the ages of 21 and 34 bought just 27 percent of all new vehicles sold in America, down from the peak of 38 percent in 1985. Miles driven are down, too. Even the proportion of teenagers with a license fell, by 28 percent, between 1998 and 2008
Source - https://www.theatlantic.com/magazine...m_source=atlfb
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Old 23rd June 2017, 16:31   #2
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

Uber, cheap flights, self-drive etc...Gen Y has so many facilities which Gen X and behind didn't have.
Parking issues, stress due to increased traffic, poor infrastructure(especially in India)...Gen Y have more things to worry about
Carefree, health conscious and even beauty conscious...Gen Y are more different than their seniors

My younger cousins who earn well in the IT companies and have been working for 5+ years still don't have any idea of buying a car!
When I ask them why, they in turn ask me why i take so much trouble in driving a car around when I can take a 'rick' (I used to call it an autorickshaw or Auto-but 'rick' is cooler you see) or when I can just Uber (they don't even call it 'taking a a taxi')
One more thing is 'buying a car' was an achievement for majority of old-gen people but now every household has a car and there are no 'special' feelings attached to a car.

So yes, It's a worry for car makers but it's also one of the main reasons for them to focus more on driver-less cars. As they say..."change is the only constant" and automakers have to adapt to this change in the way their customers think

Last edited by SDP : 5th July 2017 at 14:38. Reason: minor typo
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Old 23rd June 2017, 17:06   #3
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

I have an opposite view. I don't think this is a big issue in India. Assuming the definitions of Millennials to be those born in the early eighties to early nineties period (~23-33 years today), I think that it is this generation that is really driving the sales of the entry premium/premium hatch/Pseudo SUV Segment- The likes of the Grand i10, Tiago, Baleno, i20, Brezza and even the Creta. 4-5 models that contribute 40-50% of sales in India.

The main difference is that this generation probably no longer thinks of buying a car as an 'achievement'. With the wide range of models and easy finance schemes and higher disposable incomes, it's no longer a big deal to buy a car.

So I would assume that a person may delay purchase of a car until he/she needs it. But I don't think they would 'not buy a car' at all.

This could be a reason why the more premium models are enjoying huge sales.
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Old 23rd June 2017, 19:19   #4
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

I agree with this thread. When I turned 18, in 1998, My most prized possession was my Suzuki Samurai. Most of my peer group spent their 18th birthday at the RTO office getting their license. But now I notice that a 18 year old would rather have an iPhone than a new scooter/ bike. The only kids who are passionate about bikes are the ones doing wheelies and stunts on the road. I could do most of the repairs in my dad's padmini when I was 16. Ask any kid about a car and it's a wonder if they figure how to open the hood.
The reason I think is that parents are now over protective. They would rather their child is at home watching porn secretly than riding a bicycle on the road where he could be injured. Gadgets galore from the age of 3. Kids should be physically safe or it's a reflection on poor parenting.
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Old 23rd June 2017, 20:15   #5
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

Since the article talks about the US, here's some reasons why I feel the no. of people buying cars has gone down:

- Cost of real estate: parking in San Francisco downtown costs about $ 500/month, similar in other cities. Parking in suburbs though is generally part of your apartment lease
- Convenience of Uber: I think app-based taxis have revolutionized transportation

In the country such as the US with a robust self-drive rental ecosystem, you can entirely depend on app-based taxis and self-drive rentals for all your needs. Unless of course, you have kids that need to be chauffeured around town.

- Student debt: a tremendous problem in the US is a skyrocketing cost of education

- Tendency to keep cars longer: very few people go for the 3-year leases, most people just drive the car they have for anywhere between 5-10 years. Most of my classmates/colleagues drove cars anywhere between 3 to 15 years; they often being the 3/4th owner

Closer home,

- Parking remains a big issue given our real-estate costs and that parking itself costs up to 5% of your home

- Possibility of frequent relocation means having to deal with re-registration, road-tax and all that

- Emergence of app-based taxis and rentals

I think such a trend will take time to show in India, given that cars generally are an indicator of one's "arrival", and our public transportation infrastructure is struggling.
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Old 23rd June 2017, 22:42   #6
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

Chinese and Indian car markets are still growing between 5 to 10 percent per annum. But looking at this graph, it does look like USA car sales is stagnating or trending lower.

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Source: statista.com

But think about this - 320 million population and 7 to 8 million car sales per annum? That is insanely high. Moreover, out of that 320 million, only 2/3rd of population (200 million) is of car buying age (16 to 65 yrs).
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Old 24th June 2017, 00:31   #7
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

Uber, airbnb and the likes would have you believe that the concept of personal ownership of such expensive and capital intensive assets itself is old-fashioned. A sharing economy can amortize the cost of these assets over a larger number of people and use them more efficiently at the same time.

Personally, I got myself an electric bicycle when I moved to Bangalore and IMO it's the single best solution for city driving. You can filter through jampacked roads, most malls and all don't charge you for the parking, and it also exercises your limbs, but not to the extent that you'll be sweaty by the time you get to office. (There's also the added benefit of no pollution, but doesn't count for much since the BMTC bus in front of you is spewing more smoke than a 1000 such vehicles will save).

I am getting the itch for touring, and speed-limited rental bikes don't cut it anymore for the occasional trip so I'm in the market for a motorbike, but what's described here holds true for a lot of people in my age group.

But I think Indian millennials are caught between these two trends. They are increasingly the first generation of their family to have large disposable incomes (so the desire to buy a car/house to show you've made it might still be there), but they also subscribe to a lot of the values described in this article.

Last edited by anku94 : 24th June 2017 at 00:38.
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Old 24th June 2017, 12:56   #8
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

I have three kids, all adults, between 26 - 31. None of them is interested in buying a (new) car. My eldest son Luc only bought his first car about 18 months ago and it is second hand from a mate of him. He takes the tram to work and his partner takes the train. They don’t need it to commute, but they do like having a car now. In fact they are touring through Scotland in their VW GTI at this very moment. (And of course Dad gets to help to maintain it: http://www.team-bhp.com/forum/diy-do...ml#post4202440 (My Car Hobby: A lot of fiddling, and some driving too! Jaguar XJR, Mercedes W123 & Alfa Romeo Spider)

It’s not that they can’t afford a new one. Actually they all could, Luc and Ellen have partners and they earn very good income. Even Thomas could afford a car if he wanted to. They are simply not interested in owning a car. They all live in major towns here in the Netherlands where owning a car is a bit of a pain. You can’t just park. You need to apply for a special license to be allowed to park, cost money too. They are still at the stage where they go out a lot. You can’t drink and drive. So all their travelling is by bicycle and or public transport. They are all very environmental conscieous and they don’t like cars from that perspective either.

On the odd occassion they need a car they will borrow mine! (Except Luc)

And the same is true for most of their friends. A few have a car, but most don’t. None of the friends have ever bought a new car, except two whom got company cars. (but only use it for work related travel and not private travel as you pay tax on it then). A few have second hand cars (that they bring to me for maintenance).

The car as a status symbol is long gone in Europe. If anything driving big, fancy cars is very much frowned upon by many, if not ridiculed, or worse people will scratch your car.

When I grew up, every family in our street had one car.

I think when they grow a bit older there might be cars. Especially when you have a family not having a car can become a bit of a chore. In the street where we currently live, most families have a car, in fact most have two cars. But then most families here are 10-15 years older then my kids at the moment. So there is still some hope.

My eldest son at one time did do his dad proud by buying a classic Mercedes W123 together with a friend. Purely as a hobby/interest, not as a mode of transportation. They had to sell it as it was parked in Rotterdam. They introduced an emission free zone about a year ago and their car wasn’t allowed into Rotterdam anymore.

So I do believe car ownership is changing. Undoubtedly, it will depend on the individual circumstances. To be honest, ever since we returned back to the Netherlands I find myself using public transportation more and more. Whereas in the past I used to drive everywhere, I now very often find myself taking public transportation. It is often faster, more convenient and cheaper.

We live in a small village and when we left in 2009, public transport was poor, a few busses at best. Now we have tram and metro connection with The Hague and Rotterdam. I need to pop over to Rotterdam later today. It will take 15 minutes and two euro’s by metro. It would take 45 minutes by car, parking would be a pain and would cost around 4 euro per hour!

The other thing is concern for the environment. It is really a big theme in everyday life in Europe. So people do adjust the way they lead their life and spend their money.

Jeroen

Last edited by Jeroen : 24th June 2017 at 12:58.
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Old 24th June 2017, 16:52   #9
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

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Originally Posted by Jeroen View Post
So I do believe car ownership is changing. Undoubtedly, it will depend on the individual circumstances. To be honest, ever since we returned back to the Netherlands I find myself using public transportation more and more. Whereas in the past I used to drive everywhere, I now very often find myself taking public transportation. It is often faster, more convenient and cheaper.
As some wise man said, a developed country is not one where the poor own/ drive cars. It is one where the rich use public transport

Using public transport with last mile connectivity in Europe has been efficient, especially with reliability not being an issue despite some places seeing 4 seasons in a day. Perhaps this was earlier an issue in the US, but has been addressed a bit by services that offer cabs or self drive rentals that complement whatever public transport exists outside of the metro networks.

In India, well...
don't we think of what is the lesser evil? Getting stuck in traffic in a comfortable car or wasting more time in finding last mile connectivity by public transport. I try to change around my commute times or even locations based on traffic situations. I dont think I would be able to move away from car ownership though. Especially as the aspect or benchmark of hygiene for self drive rentals here is not the same as in other countries where I have rented. No offence intended
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Old 24th June 2017, 17:08   #10
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

Truth be told, for a person living in Delhi getting around the city is much easier on the Metro and Uber. Running a petrol car turns out to be more expensive than an Uber in the city, especially with the super low pricing and promos all the time. And I'm not even considering the,maintenance and insurance etc.

Yes, I love driving and that's why I steal my sister's car whenever I want to go somewhere doesn't matter close or far. And combined with the hourly parking charges, taking an Uber is easier and cheaper for when there is traffic. and I would still get me a car when I can get one of my own, but other than in a few cases such as needing a ride in the odd hours of the day, it doesn't make a lot of sense in a good Megacity.

And I can imagine that the situation of public transport would be better in the more developed nations, given Delhi's system is quite flawed.

But I don't exactly get why the number of homes being bought are decreasing. A plausible explanation would be that these days the years of education and the years leading upto settling down with the family have increased. Why would you buy a house in a place that you're not certain about living for at least the next 10 years? or if you would need a bigger place.
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Old 24th June 2017, 17:18   #11
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Default Re: A teenager's perspective

Quote:
Originally Posted by aargee View Post
Came across this interesting analogy & sharing...


Source - https://www.theatlantic.com/magazine...m_source=atlfb
To be honest, I don't really prefer rented cars much at all. I am only 15, but I can think of a few reasons. Here they are:
  • Battered up conditions of the rental cars, especially in our country where most people don't have civic sense at all.
  • The "My car" feeling isn't there at all. As a car enthusiast, I want an emotional connect with my car. That IMHO comes only through keeping it clean and waxing it yourself, doing mods, paying EMIs et all. And especially doing it in front of your inquisitive neighbours.
  • Again, it will take time for car rentals to establish themselves completely in India. XUV 500s, Ciaz' or even something like a Polo doesn't get my fancy these days. Owning one will be the goal for me. However, if it's a sports or a super car at a competitive renting price, I might consider it for a shorter term at least.

But of course, these kind of concepts are unbeaten when it comes to renting niche cars or experiencing one. However, would I like to keep and drive a rental car in the longer term? No, thank you.

At the same time, if I offer it up to a friend of mine, he will happily rent one. They start salivating at the prospect of sports and super cars as well. Many in my school like the short term delight you get from renting a car. Think of it this way, you don't have to pay service bills, don't have to worry about EMIs or go through the hassle of buying or more importantly selling one off. It's akin to having your cake and eating it too!

Not a real estate enthusiast, so don't know as to why house sales are dropping. But my stand is totally opposite when it comes to owning a home. I would rather rent one.

Here's a forbes article on the cadillac rental program. A very interesting read.
https://www.forbes.com/sites/jimgorz.../#21e45b303e9c
Regards,
vishy

Last edited by vishy76 : 24th June 2017 at 17:25.
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Old 25th June 2017, 02:32   #12
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

Quote:
Originally Posted by aargee View Post
Came across this interesting analogy & sharing...

Attachment 1650559



Source - https://www.theatlantic.com/magazine...m_source=atlfb
Just FYI - that is a 2012 article; based on situation from 2009 to 2011. Guess what happened before that period? Financial crisis.

A lot of traditional "American habits" changed during that period. Most impact was seen in the younger segments.

Millennials focused more on saving money than spending it. Anything that had a credit component was opted out or delayed as much as possible.

Credit card usage went down - this was a problem statement given by some of my clients during that phase. I have/had several young college passouts in my office who started their careers using strictly debit cards; and that seemed to be the case across the entire segment.

We are discussing a "problem statement" that is over 5 years old. I don't think the "problem" is even relevant as of now. Even the chart in the below post shows the dip in sales in 2009 - 2011, but decent growth after that.


Quote:
Originally Posted by smartcat View Post

Attachment 1650680

Source: statista.com

Last edited by ninjatalli : 25th June 2017 at 02:36.
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Old 25th June 2017, 09:59   #13
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

Unfortunately, this is the time of extremes, there are about 4 classifications of people today :

1) Those who earn a lot and spend a lot (a car + home on loans).

2) Those who earn less and spend less (until of course, their finances pick up)

3) Those who earn less and spend more (not recommended but few pick up cars like a Honda City or a Polo TSi with an annual salary that is hardly 1/3rd of the car cost)

4) Those who earn a lot but spend like misers (renting a boxy room, no vehicles, just living a Bohemian lifestyle with clubbing, movies etc and using their room to just crash in).

All of these examples are around my age group, things are changing fast and scarily so. Earlier the focus was to build a strong foundation financially and move up the ranks and considering things like first house, first car as achievements. In the internet era, Bohemianism has become a new trend. There are extremes, people who simply buy 2-3 cars with absolutely no need for them and then on the other end people who buy no cars at all.

Even in the era of UBER, public transport such as metros, autos, buses etc, I consider one car to be an absolute requirement for ultimate convenience. To me own car+UBER+auto+bus+walk, every damn thing is needed today to get around in busy metros where one thing or the other lets us down on a daily basis. Lets face it, we like control over our travel and the car is the only way to do so.

A car used to be considered part of a family, part of memories.. today with the disposable "loans" available.. people simply think of it as a status symbol. Heck anything off the mainstream is considered cool today. Good or bad, who knows? We all know trends are like leaves blooming on a tree, it is green and lush one month, and falls off the other month so this too won't last.
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Old 25th June 2017, 19:12   #14
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

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Originally Posted by ninjatalli View Post
Just FYI...We are discussing a "problem statement" that is over 5 years old. I don't think the "problem" is even relevant as of now
Just FYI, this is 3, not 5, years old - https://www.fastcompany.com/3027876/...figure-out-why

An year old - http://www.latimes.com/business/auto...223-story.html

Few months old - http://www.chicagotribune.com/classi...208-story.html

Although the recent times appear to be changing
http://www.businessinsider.in/Everyt...w/51336254.cms
http://www.autonews.com/article/2017...als-are-coming
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Old 25th June 2017, 20:52   #15
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Default Re: The Cheapest Generation - Why Millennials arenít buying cars or houses

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Originally Posted by aargee View Post
Just FYI, this is 3, not 5, years old -
LOL

Read again my post - the article you started with is of Sept 2012; that's what I highlighted. You can share an article with yesterday's date but that doesn't change what was said and done That article was talking about a situation across the US (and probably in other parts of the world) which was primarily impacted by the financial crisis that occurred over 5 years back; declining auto sales was just one of them.

I mentioned a similar problem statement given by some of my (banking) consulting clients that touched upon the same cause-effect situation; we did some heavy digging into the market situation and had advised accordingly that this was a trend to be handled differently WRT to the younger generation and wait for the market to pick up. Is the problem still there in the market? Yes and no. It depends (that will take up an entirely separate thread!)

Rather than giving a knee-jerk reaction to my post defending your original post , it would be more appropriate if you/we started threads with relevant up-to date articles for the forum to discuss and debate.

As for the current state of the US auto sales and whether the "problem" still exists, there are probably several articles showcasing both positive and negative trends; not really interested in going into that direction. Honestly the world could do with declining auto sales; it's a good thing for the world (from environment perspective).

Over and out!

Last edited by ninjatalli : 25th June 2017 at 20:58.
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