What car does Gen Y want? Right now, that prototype looks like it can only be a product of science fiction
Fuel efficient but fast. Distinctly different but brand authentic. Affordable but not cheap. How do you make a car for a market that wants it all?
That is the huge dilemma of the global car industry. In less than decade, Gen Y will represent a lion's share of the car market at around 40%, according to research firm Deloitte LLP in a study called Connecting with Gen Y: Making Cars Cool Again.
Gen Y accounts for less than 25% of the auto market today. But given that Gen Y is a very puzzling segment to sell to and the industry typically sells to its target market decades early, that 25% has become a much coveted portion of the pie.
What's more, with the state the American auto industry is in, 75 million coming-of-age car buyers is nothing to sniff at. The prospects for car makers becomes even juicier as 42.1% of that number (some 31.6 million) say they will still be driving the same brand after five years. Although 28% say they expect to be driving another brand since their current car was all they could afford or it was what they had been given.
Deloitte's report, presented at the North American International Auto Show in Detroit last January, was a product of surveys done by MBA candidates from four American business schools: Boston College, Michigan State, USC, and Clemenson.
What Generation Gap?
One remarkable fact revealed by the Deloitte study is the absence of a gap between Gen Y and their boomer parents when it comes to car brand preferences. Among the top 10 brands Gen Y currently drives, eight also appear on their parents' list.
However, there is a disparity in vehicle type, with 65% of Gen Y saying their car is different from what their parents drive (or once drove).
Another remarkable change is the growing preference for environment-friendly cars, with 80% of Gen Y saying they are willing to pay more for it. 'Environmentally friendly' made it to the top three reasons why a car is cool, chosen by 35% of respondents. The other two are exterior styling (44%) and affordability (40%). It must be considered though that 63% of Gen Y regards cost as an indicator of quality.
What is interesting is, despite the environmental factor, 1 in 4 of those surveyed see themselves driving an SUV in five years. The reason for this is that cool does not necessarily translate to a purchase for Gen Y.
The environment is notably absent among the top three features Gen Y looks for in the car it purchases: Gas mileage (12.2%), Affordability/Price (6.9%), and Exterior styling/looks (5.5%).
So for Gen Y, the two most important factors in choosing a care are clearly image (looks) and pocket (price).
Perhaps the most daunting thing for the global automotive industry trying to chase this elusive market is that owning a car is no longer the coming-of-age right of passage it was for boomers and Gen X-ers. Car makers now have to compete with laptop makers, phone makers, and portable media and game designers to catch Gen Y's attention.
The auto industry can conduct a million studies on purchase preference, but it may have to accept that, to Generation Y, the automobile is just another toy.
Print ed: 07/10