You know that study that just came out declaring "the end of the driving boom," because Gen Y supposedly doesn't care about cars?
Ignore it.
The 69-page study by the Frontier Group and the Public Interest Research Group is just another case of inside-the-beltway thinking attempting to drive public policy decisions. Or using statistics to ignore the real causal evidence for why something is happening.
According to the study, "Young people aged 16 to 34 drove 23 percent fewer miles on average in 2009 than they did in 2001 -- a greater decline in driving than any other age group. The severe economic recession was likely responsible for some of the decline, but not all."
The study posits that millenials would rather Tweet than drive, and would rather live in an urban setting with mass transit than commute in from the suburbs.
When you read between the lines, the Frontier/PIRG study is a clear call for investing less in freeways and main arteries, and a call for more subways and light rail.
The Frontier/PIRG study includes lots of fever-line charts that show a decline in miles driven by American consumers in the last several years. But several points defeat the study's own hypothesis, including:
-- Despite a decline in 16- to 24-year-olds with drivers' licenses, nearly 70 percent still have them. That's very much in the historical ballpark, not a perilous drop.
-- Vehicle miles traveled have directly correlated with per-capita gross domestic product since 1956 -- no matter the price of gasoline. When the economy went into recession in December 2007, so did America's driving miles. It did the same thing when GDP dipped in 1974, 1982 and 1990. It stands to reason that, when the economy improves, miles driven should increase again.
But the biggest problem with the survey is its basic psychographic misunderstanding: Young people do care about cars. They just haven't had to.
Either unemployed or underemployed, many Gen Y college grads have moved back home with their helicopter parents who have resumed their role as their childrens' personal taxi services. Gen Ys can't afford cars, but they can afford iPhones.
At some point, however, the economy will improve. Recent grads will get real jobs, have boyfriends and girlfriends, and realize that having mom chauffeur a date to see Vampire Weekend isn't cool when you're 25.
Then there's the marriage factor. Even if millenials can afford that cool 600-square-foot artist's loft close to the subway station, it won't fit a family, and it's in a cruddy, crowded neighborhood with a lousy school district.
Gen Y will enter suburban life -- it's a demographic certainty. Kicking and screaming, the last bohemians of Gen Y will realize the car has changed from being an unneeded luxury to an absolute necessity.
This trend already appears to be happening.
The same day that the Frontier/PIRG study came out, Edmunds.com released its own findings about Gen Y buyers.
"With higher unemployment, lower income and a greater propensity to live at home than previous generations at this age, it hardly comes as a surprise that these younger adults have failed to buy new cars at the same rate as their predecessors," Edmunds chief economist Lacey Plache wrote.
Sounds just like the Frontier/PIRG study, right?
Except that, and this is a big one, with last year's 13 percent gain in U.S. auto sales, it was millennials that set the pace. In tracking Polk data on personal retail sales, where the age of the buyer is known, the segment of 18- to 34-year-old car buyers grew by more than 20 percent in 2012, Edmunds says.
Plache said that sales to millenials have maintained those gains in early 2013.
What's more, it appears millenials want vehicles that are fun to drive -- hardly the types who, when forced, relent and buy a commodity car.
"The problem could be one of economics, rather than preferences, because when millennials do buy cars, they aren't more likely than older car buyers to choose simple, utilitarian vehicles," Plache's analysis shows.
In other words, millenials are saving for that BMW 328i rather than throwing their first paycheck toward a Toyota Yaris.
"Millennials' relatively stronger preferences for luxury and sports cars suggests that they are interested in cars as more than just a means to get around. That interest bodes well for car sales if the millennials can overcome their economic problems," Plache writes.
Edmunds conclusion: While economic challenges remain, improving fundamentals indicate the 70 million or so members of Gen Y generation -- long feared to be uninterested in driving and cars -- are finally joining the ranks of new-car buyers in earnest.
