Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

General Motors Company (GM): How Ford Motor Company (F)’s Attracting a Disappearing Consumer

Born during an explosion in digital technology, the Millennial generation (of which I’m a member) has become tech-savvy, multitasking phenomenons, at one with smartphones and the Internet. Ford Motor Company (NYSE:F)General Motors Company (NYSE:GM), and the rest of the auto industry face a difficult challenge to attract my generation amid adverse market changes and ever-increasing advertising noise. But Ford Motor Company (NYSE:F) seems to have accomplished this better than its  peers.

What’s the big problem?
Millennials continue to drive less due to the recent urbanization trend where over 80% of our population lives in urban cities — a percentage that continues to climb. This trend makes my generation more reluctant to purchase a vehicle, with public transit so readily available in the big city.

Ford Motor Company (NYSE:F)

This is even more true when you consider young adults’ student loans have recently hit record highs. Payment delinquency on those loans has increased rapidly as some graduates struggle to find good jobs. These trends could diminish vehicle demand and crimp automakers’ future revenue pipeline. Currently, my generation is estimated to be 80 million consumers strong, with an estimated purchasing power of $200 billion annually. That’s lot of profits to miss out on.

Over the last six decades, one trend has been consistent: Americans drive more and more every year. But in 2004, that trend reversed, and miles driven per person continue to decline to this day. Automakers are wondering whether this is only a historical hiccup, or if the Millennial generation is about to change how Americans live and work as dramatically as the baby boomers did.

U.S. Department of Transportation’s (U.S. DOT) Traffic Volume Trends series of reports; data from previous years from U.S. DOT’s Highway Statistics series of reports. Source:

Boom and bust?
The baby boomers ushered in a driving boom fueled by low gas prices that made driving cheap enough for nearly the entire population. But those gas prices have risen dramatically, and younger consumers now are often saddled with more student loan debt than in the past making it more difficult to take on another large monthly payment.

We also have to consider that decades ago, women were newly entered into the labor force and became incremental full-time commuters adding to the boom in miles driven — a type of surge we won’t have again. The baby boom also led to a surge of people at peak driving age through the mid 2000s. That surge, combined with a suburban population explosion, drastically increased miles driven and the need for more vehicles.

Those trends aren’t helping increase miles driven today; thus, the demand for vehicles may stay flat or even decline. Today the Millennials are the largest generation in the U.S., and these trends have some automotive investors worried.

But don’t panic just yet.

There’s good news, too
Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) will still have plenty of growth in emerging markets to offset a potential decline in Millennial vehicle purchases.

Right now, Ford Motor Company (NYSE:F) gets almost two-thirds of its revenues from North America and its Asia-Pacific-Africa division brings in just over 8%. The latter region is expected to bring in 40% of Ford’s revenues by the end of the decade; an enormous jump.

In addition to that, both companies get a large portion of their profits from full-size pickup trucks, a segment liklely to be less affected as Millennials’ switch from suburban to urban living.

Isabelle Helms, senior director of research and marketing analytics for, is also more optimistic about this being a small hiccup in history. “Millennials do care about cars, and they do intend to drive,” said Helms, according to the Detroit News. “They’re just delaying their purchase, and cars are very much a very important part of their lives.”

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.