08:28 AM

Will 'Digital Natives' Want To Buy Cars?

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Younger generations don't seem to want to own cars, or even like cars because of their pollution and high carbon footprints...will that change?

 By Intel Free Press

 Past generations believed that owning a car was the ticket to an upwardly mobile lifestyle, but today many young people are opting out of car ownership in favor of the mobile experiences they get from smartphones, tablets and laptops.

Online experiences are growing in importance and grabbing mindshare from cars, particularly among teens and twentysomethings. Research from Gartner indicates that 30 percent of the 18- to 24-year-old vehicle owners in the United States would likely choose Internet access over owning a vehicle if given only a single choice. That drops to 12 percent for drivers 54 years and older.

"Younger consumers don't show the same interest, the same appeal for automobiles as older generations," said Thilo Koslowski, vice president at Gartner research. "Cars are expensive and they're in competition with mobile computing, which lets people do things that they can't do with a car. People used to drive a car somewhere to meet someone -- now they use their device."

Koslowski points to Gartner research showing that 35 percent of 18- to 24-year-olds preferred staying in touch with friends and family via social networks than driving to see them in person. That behavior is in stark contrast to people 54 years and older, 85 percent of whom would prefer driving to meet family and friends in person.

Car Sales Tapering

While some estimates show U.S auto sales growing from 14.4 to 15.4 million between 2012 and 2013, that's short of the 2007 peak when 16.1 million cars were sold just prior to the auto industry crisis. Positive earnings reports by the Big Three, including Chrysler which recently claimed it had the best November since 2007, still have some auto industry experts concerned that as many as 2 million cars are not being sold because younger generations are unable to purchase one or simply uninterested in owning a vehicle.

Automakers are taking the threat that this trend poses to their business seriously, according to industry experts, and a shift in approach will be apparent in the latest models and concepts on display at the International Consumer Electronics Show in Las Vegas.

Koslowski predicts that automakers will push Internet technologies and integrated computer applications at the upcoming CES. He and Staci Palmer, general manager of automotive solutions division at Intel, agree that automakers have already realized that a majority of consumers now expect basic Internet connectivity in their car.

"The world is changing in terms of consumers' expectations to always be connected, always be informed and always have access to Web-based information," said Palmer.

A burgeoning market for in-vehicle technology supports that shift in consumer expectations. According to the Consumer Electronics Association, 15 percent of U.S. households already own a vehicle with a connected communication or entertainment system, and the trade organization expects that automobile technology will generate $8.7 billion in revenue in 2013.

Younger Car Buyers Expect Tech

Digital natives, people who were born after 1980 and whose lives have been saturated with technology, are impacting the future of the auto industry, according to Palmer. Digital natives "make up about 40 percent of today's car buying audience in the United States, and there are similar percentages in other parts of the world," she said.

Car makers are very interested in learning how they can appeal to younger generations, but Palmer says new Internet services are convincing many young people that they don't need to own a vehicle.

"New ideas like ride sharing are used more by the young," she said. "That's an interesting challenge for a car maker who wants to continue to attract a buyer to their brand yet has to figure out how to deal with these changing consumer preferences."

Automakers may need to rethink how they conduct business, said Koslowski. "People may not need to own a vehicle," he said. "Someday, cars may just go to the next person who needs it."

In the near term, Koslowski sees automakers quickening their pace of innovation and teaming with technology device makers and service providers in order to attract new and returning car buyers.