THE BLOG

Millennials Love Cars And Detroit Doesn't Know It

03/02/2015 10:44 am ET | Updated May 02, 2015

Millennials make up nearly one quarter of America's population and will be nearly half of the nation's workforce by 2020. Their increasing prominence in the economy and culture has spurred countless news stories and reports on the divergence of millennials' views and attitudes from previous generations. Nearly every day, a major news outlet proclaims that millennials have radical views on privacy, work, marriage and life goals. Millennials have an ostensible disdain for ownership of anything. They prefer the sharing economy over self-purchasing for big-ticket items like cars. It's a new type of bohemian lifestyle that confuses many Americans and frightens established auto executives.

But actual research shows a very different picture than the one we are getting from the media. In fact, the more we dive into millennials' views about ownership, the more we find that they are not a monolithic group bent on creating a new normal. Just like their Baby Boomer parents, there are diverse segments within the population of millennials; each with distinct attitudes and behaviors.

The recently released Portia/UCLA Millennials and Cars Study conducted research on young people and their views on car ownership. The team, comprised of marketing experts and researchers from Portia Consulting and UCLA's esteemed Anderson School of Management, wanted to see if millennials are really embracing the sharing economy and turning away from traditional concepts of ownership.

One of the most interesting facts from our study is that nearly half of millennials, 47 percent, believe that cars, and which brand of car they own, really matter. And even more surprising: one-in-five are what the industry calls "enthusiasts." Our findings fly in the face of the common perception that ride-sharing companies like Uber and Lyft and the urban bicycle movement are killing the automobile.

The millennial abandonment of car culture is a myth fostered by media hype and confirmation bias from automakers' critics. Recently, the Washington Post shared "The many reasons millennials are shunning cars," while Fast Company declared "Millennials don't care about owning cars," and NPR explained "Why millennials are ditching cars and redefining ownership." And after the auto bailout cost American taxpayers nearly $10 billion, Detroit has become an easy target.

Most millennials do indeed want to own cars. But they also are accustomed to user-friendly, internet-enabled mobility options such as ZipCar, Sidecar and CitiBike. The result is a large, empowered consumer group that expects much more from a car company than their parents ever did.

Our understanding of the two segments that make up the car-loving millennials (we call them Purposeful Patrons and Ambitious Trendsters), combined with one-on-one interviews, showed a surprising affinity for the Tesla Motors brand. It's unexpected considering the nascent company's relatively low sales volume and the few opportunities millennials have to see, touch and drive the new cars. A data point that's telling: both types of car-loving millennials greatly admire Elon Musk. But the different groups of millennials like Musk and Tesla for very different reasons. One is drawn to Musk's maverick, Steve Jobs-esque use of technology to change norms, while the other appreciates Tesla's commitment to create good in society.

Tesla isn't the only surprisingly popular brand among millennials. Volkswagen, the world's second-largest automaker has never been a sales leader in America, but it consistently ranked near the top for two distinct and powerful segments of millennials (which we refer to as Mindful Mainstreamers and Practical Greensters). These millennials are uniquely conscious of practical and environmental matters, as well as inclusivity. These segments tend to be Hispanic and Asian - important because of population size, growth rate and future wealth. These are the future demographic leaders and they like Tesla and VW.

Tesla Motors is a distinctly Silicon Valley brand; Volkswagen's U.S. headquarters is in Virginia and its design center is in Los Angeles. For millennials, California is supplanting Detroit as the center of the car universe. An economic downturn may have changed the way young people view mobility, but once millennials gain spending power, the auto industry is going to be turned upside down. Detroit is still catering to traditional car enthusiasts, but future customers will be more purposeful car lovers who prioritize brands based on alignment with their own personal values.

It's been easy to buy into the myth that young people dislike cars because they're young and poor. But for the approximately 80 million millennials in the U.S., there's a long way to go before they give up car ownership in favor of ride sharing and bikes alone. Automakers know how hard it is to be loved by car enthusiasts, the purposeful decision-makers and the social do-gooders alike. But Elon Musk has cracked the millennial code, and others, like VW, aren't far behind. Detroit needs to put the pedal to the metal and catch up fast.