• 16- to 34-year-olds are driving fewer miles per year
  • Preference for urban settings puts space at a premium
  • Young commuters demand constant connectivity

Remember when the American Dream meant a suburban home with a white picket fence? Turns out the Millennials -- those born from about 1980 to 2000 -- have uploaded a rather different version to their generational server.

According to new studies by the American Public Transit Association (APTA) and the U.S. PIRG Education Fund, these young whippersnappers would rather live within city limits than outside them, surrounded by technology, of course. They also lack the automotive buying power that their Baby Boomer parents enjoyed at this stage. While the studies focus on what this means for our public transit network, we also see clear implications for the future of the automotive market.

Downsized Dimensions

As you're no doubt aware if you've followed cars over the past few years, the compact and subcompact segments have been inundated with appealing new models, and Millennial driving preferences are partly responsible. Whereas spacious family sedans such as the Honda Accord and Volkswagen Passat are great for those suburban driveways, they don't work so well in tight urban spaces -- and their asking prices can pose a problem for tight budgets. Accordingly, the market has responded with cool-looking, fun-to-drive small cars, such as the FIAT 500, the Ford Fiesta and Focus hatchbacks and the Kia Rio hatchback, as well as pint-sized crossovers such as the current Hyundai Tucson. As for more affluent city-dwellers, there's a growing number of premium compacts to meet their needs, including MINI's ever-expanding lineup and Mercedes-Benz's new CLA sedan and upcoming GLA crossover.

Cabin Technology

If you look at the features on this new wave of small cars and crossovers, you'll be amazed by how many high-tech gadgets come standard. Just five years ago, items such as USB ports, Bluetooth phone/audio and smartphone app integration were considered upscale and priced as such, but today they're increasingly par for the course, even on models under $20,000. As so-called "digital natives," Millennials expect a full range of connectivity options in their cars -- and it's not cool if the more affordable models skimp on these features. By 2030, when Millennials will dominate the 35- to 54-year-old peak driving demographic, cars may be more akin to iPhones with wheels than the quaint mechanical devices we grew up with.

Hybrid/Electric Power

A third implication of the Millennial shift is that hybrid and electric cars will become more popular. Hybrids are great for city driving because their fuel economy generally doesn't suffer, while pure electric cars make perfect sense for local trips -- particularly as urban EV infrastructure expands to provide more charging stations. The main limiting factor is cost: As noted, many Millennials don't yet have the financial resources to buy expensive new cars, and alternative-energy vehicles undoubtedly command a price premium. But that's largely a function of age. If you give those 25-year-olds a decade or so, they'll be ready to buy a car that strikes their fancy, and we expect automakers will be there waiting with expanded rosters of attractive hybrids and EVs.

What it means to you: The automobile is hardly going the way of the dodo, as cars are still the preferred Millennial mode of transportation, according to the APTA study, edging out walking and trouncing trains, buses and bicycles. However, this younger generation presents automakers with new challenges, and car shoppers can expect to see corresponding changes on the showroom floor.

author photo

Josh Sadlier is an automotive journalist based in Los Angeles and has contributed to such publications as Edmunds.com and DriverSide.com. He holds arguably the most unexpected degree in his profession: a master's in Theological Studies.

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