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How the Auto Industry Completely Lost the Millennials

A veteran auto writer looks at how the world’s automakers got this generation so wrong.

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And, frankly, a lot of Millennials have got to be just plain sick of the things after spending 16 to 20 years with Suburbans strapped to their asses several hours a day being driven to and from school, shopping and activities. (We also rammed home the point about waste and the environment by buying and driving them in the only contemporary machines heavier than and as thirsty as a 1969 Chrysler Imperial during their formative years.)

All that goes a long way toward explaining why a car isn’t an object of desire in high school and college anymore. It’s not that big a loss for the carmakers (yet), since most students were buying used cars to start with. But the job, paycheck, benefits and stability that previous generations enjoyed immediately after college  -- the inner voice of the “responsible adult” who said “I need to build my credit. Buying a new car will do that” -- are by no means certain as this generation comes out the other end of the educational system.

Start with money. Let's say that after college and in their first real jobs, they think they have to have a car. In my mid-20s, I could make $7,000-$8,000 for a new 1984 Honda Civic work. That’s $15,500-$17,700 in 2012 dollars. But I was making $21,000 ($46,500 adjusted), wasn’t starting out with six figures in college loans, gas was maybe a buck a gallon, and the Civic got 44 mpg. Oh, yeah…and I could insure it for about $350 a year ($775 in today’s money).

Today? A 2012 Civic runs between $16,000 and $26,300. So it’s anywhere from a little to a lot more expensive, depending on the trim level. The only model that gets 44 mpg is the hybrid, which is $24,200. The dollar a gallon gas in 1984 translates to $2.25 adjusted for inflation, meaning at $4.50 a gallon now, it’s double what it cost me in real money. And even if you’re sleeping with Flo from Progressive or the GEICO gecko (it’s not mine to judge), you’re unlikely to get insurance on a new car in an urban area (where evidence suggests most Millennials would rather live) in your 20s for $775 a year.

$10,000 would be a stretch for a first-car purchase today. And the closest new car to that is a Nissan Versa with roll-up windows, stick shift and manual locks for $10,990. It's not a bad car for what it is, but $1,000 less buys a wide variety of more interesting used cars, and keeps those buyers out of the new car market for another five years or more.

Waiting to buy -- and then waiting some more

It’s that “or more” part that scares the crap out of the car business, from manufacturers down to dealers. The Millennials don’t have a jones for what they’re selling. There’s no habit ingrained. First cars in high school and college are the gateway drug, and a lot of these folks never inhaled. Many will skip not only the new car, but the used car too. They'll bike or take public transit during and beyond that first gig. (Hell, if someone dropped $10,000 into my lap and I didn't have fires to put out, I'd rather have this year's Power Mac with Cinema Display than anything $10K could buy on a car lot.)

And then comes the stark terror…the wake-up-screaming thought:

What if these people never buy a new car in their lives?

The car manufacturers can't just shrug and say "Caught us. Game over." So they're still trying. But every idea of "what the kids want" adds weight, complexity and cost, making the manufacturers appear even more clueless.

 
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