Generation Z Worries Car-Makers
We are currently riding the crest of a sales wave that has seen UK car sales grow for more than three years, and sales levels are now reaching numbers not seen since the recent financial crisis.
Car manufacturing in the UK is in similarly rude health, and industry observers think that we might soon see production numbers exceed those of the 1970s, when British Leyland dominated the market. We might be looking soon at record numbers of cars rolling off UK production lines.
All is rosy in the garden, you might think, but some marketing people at the car companies are beginning to get a little nervous about the future. The trouble is that the people buying all those cars are older. Younger people under 23, who are being called Generation Z, are simply not interested, and car sales amongst this group are at an all-time low. That is very worrying indeed for car companies, and firms such as Ford are spending serious research dollars on trying to find out the reasons for the lack of interest and what, if anything, can be done. If an answer is not found, car sales are due to drop off a cliff pretty soon, which adds a little urgency to the work being done by the likes of Ford's worldwide manager of consumer trends, Sheryl Connelly.
It wasn't so long ago that owning a car was the epitome of cool, especially among young males. These young men customised their cars, pimped their rides and generally poured a lot of time, effort, money and love into making sure they had the right car. Sadly for the car-makers, this is no longer the case, and the reasons seem to be many and varied.
One of the most important of these is simply expense. This is not the cost of buying the car, which remains pretty affordable, or even the cost of fuel. Instead, the problem is insurance. It used to be the case that parents would simply put their kids on their own insurance, even for a car that was in reality driven almost exclusively by the youngster. But insurance companies are cracking down on this practice, and the cost of insuring a car purely for the young person to drive is now almost prohibitive.
Other reasons for the low sales are more subtle. Young people now communicate with each other easily on platforms such as Whatsapp and Facebook. This means that it is not so urgent a matter to drive round to your mate's place for a chat. Many Generation Zers also appear to think that car ownership, if not cars themselves, are deeply uncool. These are people who have spent their formative years learning all about climate change and CO2 emissions, so owning a car looks a little too much like being an enemy of the planet. Many will instead opt simply to use public transport or car clubs or start their own car-sharing group. While the latter two solutions will involve some car sales, it will mean far fewer units being sold.
Another factor is the current trend for constantly updating your technology. Young people are now used to 'upgrading' their smartphones every year or so to the latest model. It is not easy, or cheap, to do this with cars, and young people may be wary of being left with an outdated model, which would be deeply uncool. These youngsters also like showing off their tech, and it is a lot easier to do that with an Apple watch than with a car parked in a car park.
The stakes, then, are high for the car companies, and they are responding. Ford has started its own car-sharing scheme to try to make their cars more accessible, and cooler, to young urban people in London. It is this move to accessing services rather than owning them which may just be the future for car usage, but it is not one that is going to sell as many cars. Perhaps that means more bargains for the rest of us.