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Gen Text worries automakers

Millennial teens would rather have a smartphone than a car

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Given a choice between a new Toyota Corolla or the latest iPhone, 16-year-old Allison Katz of Irvine, Calif., says that's an easy one.

She'd take the phone.

Texting drives her social life. She doesn't have a driver's licence and hasn't rushed to get one.

"I mostly stay near my house except for soccer practice, and then Mom or Dad drives," Allison said.

It's enough to keep an auto executive awake at night.

Thirty years ago, nearly half of 16-year-olds had a driver's licence, their passport to independence. By 2010, that figure had dropped to 28 per cent, according to research from the University of Michigan.

The cultural shift is largely the result of technology that keeps teens connected to one another and the coolest new stuff without ever getting into a car. All the adolescent staples -- music, movies, clothes, books -- are available with a mouse click or smartphone swipe.

Driving once allowed teens "to go where you want, do what you want, see who you want and, in some sense, be who you want," said Lindsey Kirchoff, 23, of marketing software company HubSpot and a millennial-trend marketing consultant. "The Internet has made the freedom that comes with a licence anticlimactic."

This generation's waning interest in driving has serious long-term consequences for automotive sales and marketing. Before selling young buyers on any particular model -- say, a Honda Civic versus a Chevrolet Cruze -- automakers have to persuade them they need a car at all.

Drivers ages 15 to 20 accounted for 3.4 per cent of U.S. new-car sales in 1985, or about 500,000 vehicles, according to CNW Research, an automotive-market research firm. That dropped to two per cent last year, or just 300,000 vehicles.

The implications for automakers go deeper than a few lost or delayed sales to young drivers. Many of today's teenagers won't form the same emotional attachment to driving as their parents, who aspired to luxury or performance cars as status symbols.

Many teens without licences say they will eventually learn to drive. But they won't have "parked" up. Fast food will be walk-up rather than drive-through. They won't make formative memories in cars or develop a passion for driving. Status now comes from gigabits instead of horsepower, from the newest iPad with Retina display rather than a BMW.

This generation probably will buy fewer cars in their lifetime than their parents, concedes Jack Hollis, who heads marketing for the Toyota car brand in the U.S. That's a function of competing interests, increased auto durability and recession-honed pragmatism.

Nearly three-quarters of millennials ages 18 to 34 would rather shop online than in stores, according to a December survey by Zipcar, the hourly car-rental company. Given the choice of losing their phone or computer or their car, 65 per cent would go without their car.

"This is the Xbox generation," said Scott Griffith, Zipcar's former chief executive. "They manage their social lives as easily on the information highway as we did on the paved highway.

"The automakers are very worried."

The auto industry could help itself by better integrating technology into their cars, Toyota's Hollis said.

"The auto industry has not pushed itself with technology and design at the same speed as the rest of society. You would be hard-pressed to say that any automotive company has out-innovated its competition."

But fun-to-drive cars with dynamic styling can capture young buyers, Hollis said, noting Toyota kept that in mind when it redesigned its flagship Camry sedan. Now, 12 per cent of Camry buyers are younger than 29, up from seven per cent for the previous model.

Ford is trying to recapture young buyers on college campuses by subsidizing rental rates for its vehicles, available through car-sharing services such as Zipcar.

"Once these students have been exposed to Ford products, they will be more likely to consider buying them," said Sheryl Connelly, Ford's manager of global trends and futuring.

Chevrolet is marketing to younger buyers by focusing on their shifting priorities, Landy said. "In the past, it was all about horsepower and torque, and now it is about technology, connecting to smartphones and fuel efficiency."

Chevy's Spark and Sonic small cars offer MyLink radio, which enables drivers to purchase a $50 BringGo smartphone app to display a navigation program and traffic updates. The system mimics an embedded navigation system -- at a fraction of the cost -- and also syncs with other apps such as Pandora and Stitcher music services.

Chevrolet also is working on a "mirror link" feature that would display on a dashboard screen any app deemed safe for driving.

All this will help, but what the automakers really need, Griffith said, is "an iPhone with wheels."

-- Los Angeles Times

Republished from the Winnipeg Free Press print edition April 26, 2013 A1

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