The automotive industry has been a natural part of American society for the better part of the last century, but millennials could change the roadways as we know them. There are 92 million millennials, the largest generation in United States history, and they aren’t exactly going with the flow. Automakers have already made targeted moves to grab millennials’ attention, but with alternatives to vehicle ownership on the rise, it may not be enough.
In 2003, Toyota launched Scion in an effort to provide an affordable vehicle for younger drivers and first-time buyers. Toyota executives consider the experiment a success, but just how effective will these lessons be?
Despite automaker efforts, millennials aren’t taking the conventional route when it comes to transportation. A whopping 30 percent of millennials have no plans to purchase a vehicle in the next few years, while only 15 percent consider vehicle ownership a vital part of their lives. Obtaining a driver’s license isn’t nearly as important to millennials as it has been for past generations either.
While many millennials use public transportation, ridesharing alternatives like Lyft and Uber have grown increasingly popular. Millennials make up 70 percent of Uber’s American users, a number that threatens to change the automotive industry as we know it.
Uber kicked off in 2009, and just seven years later, it’s already worth over $50 billion. Despite failing to reach its funding goal of $70 billion in 2015, Uber’s valuation is closing in on Ford, which is currently valued at $60 billion, and GM, $55 billion.
American automakers aren’t the only companies in Uber’s path. Honda, by comparison, is worth around $60 billion as well. Toyota, the world’s largest automaker, comes in with a net worth of $239 billion.
Even automakers that are driving change in a much larger way aren’t safe from the impact of ridesharing services. Tesla, for example, is currently valued at $36.7 billion.
Uber isn’t the sole ridesharing service either. Competitors like Lyft are rising in value as well, thanks to millennials. Lyft was worth $5.5 billion in January 2016 and that number will likely continue to rise. Established automotive companies are looking to play a major role in ridesharing services, despite millennials seemingly lacking interest in purchasing a vehicle for themselves. General Motors, for example, invested $500 million into Lyft after failing to acquire the company outright.
Ridesharing services have their obstacles too. Taxi companies around the world have taken to the courts in an effort to ban companies like Uber and Lyft from operating in their cities. In Philadelphia, both companies received a court injunction banning their operation within the city. Both Uber and Lyft are appealing the injunction.
Millennials’ tastes and vehicle needs have already dramatically influenced the automotive industry. Information and entertainment systems, “infotainment,” have already become standard features in every major automotive manufacturer’s lineup.
Automotive companies are working to make their vehicles more appealing by offering sleeker designs, more power, and innovative technologies. Despite their efforts, millennials are foregoing obtaining driver’s licenses and shunning vehicle ownership in droves. This could very well be the beginning of the next generation of the automotive industry as a whole and, this time, millennials will be behind the wheel.
