Gen-Y’s Preference For Imports Spells Trouble For Domestics

There’s a great generational divide when it comes to cars.

If you’re over 30, chances are that you see automobiles as status symbols; under 30 and you’re more likely to see them as sources of air pollution. Generation Y motorists have very different transportation consumption habits than did their Baby Boomer and Generation X predecessors. According to more than a few studies and surveys, Gen Y would rather take public transportation than buy their own cars. What’s more, when gen Y does buy cars, they prefer smaller, foreign, gas-efficient vehicles like Scions, Mitsubishis and Mazdas over familiar American brands like Ford and Chevrolet.

While it’s true that “Generation Y” is really nothing more than a nickname for a large demographic born between the mid-1980s and the mid-1990s, and that it’s therefore silly to make generalizations about Gen Y, it’s still very interesting to talk about this group of 80 million young people because:

• Gen Y is the largest generational cluster in American history
• Gen Y is the first to “come up” during the Internet age, which is undoubtedly a major event in human history – they will probably be different than generations that have come before
• For the first time in history, marketers have numerous tools and devices they can use to measure the preferences and behaviors of an entire age group.

If the Gen Y studies are to be trusted, there’s some very bad news for Ford, GM, and Chrysler-Fiat: The members of Gen Y don’t like the so-called “domestics.”

Gen Y’ers Like The Bus: In a recent survey by Deloitte, the world’s largest professional services organization, 63 percent of Gen Y respondents stated they were more likely to buy used cars than new cars because the former represents a better bargain. But a sizable number of them are buying no cars (as in none). Instead, they like taking public transportation. When public transportation isn’t available, a Gen Y’er will consider using car-sharing services like Zipcar.

Gen Y’ers Don’t Mind Waiting: Where Gen X and Baby Boomers were put off by the additional time required by public transportation options, Gen Y sees this as a benefit: It gives them more time to check email, text, tweet or surf the web on their smart phone/iPad/mobile device. This means that commute time is no longer wasted spent pushing a gas pedal.

Gen Y’ers Believe Foreign Cars Are Better: When they do buy cars, Gen Y members are heavily influenced by their parents’ choices. During the 1970s and 1980s, Baby Boomers en masse turned away from American automobile manufacturers towards less expensive, more efficient Japanese models. That brand loyalty continues to dominate their offspring’s auto buying habits. Not only won’t they buy certain Detroit brands but according to J.D. Power & Associates, 24 percent of all Gen Y members actively avoid Detroit brands, citing their “bad reputation” as the reason.

Gen Y’ers Like Small, Cheap Cars with Tech Features: When they do buy new cars, Gen Y drivers are looking for multiple technology features at a price under $20,000. Tech extras that intrigue them are music servers and customizable on-screen displays that let them see the outside temperature or their current mileage. The three most popular car models among the Gen Y demographic are Scion’s tC, Mitsubishi’s Lancer and that perennial favorite among their parents’ generation as well, the Honda Civic.

Of course, all of these market studies and survey results don’t account for the following facts:

• Most Gen Y’ers don’t have kids, and kids (and dogs and extended famillies, etc.) all require bigger and bigger cars. While a sporty little coupe is great for a single 20-something, toss in a family and bigger is better.
• Also, because most Gen Y’ers don’t have kids, they’ve got plenty of time to waste surfing the net, texting, etc. on their smartphones. When they get a bit older, they may find that it’s better to drive themselves to and from work than lose an hour that could be spent at home waiting for the bus.
• Most Gen Y’ers dont’ have a lot of money, so their budget preferences are probably biased a bit towards cheap.

So, what’s the point here?

By 2012, Gen Y will account for 40 percent of all prospective motor vehicle buyers. If “American” (read Ford, GM, and Chrysler-Fiat) manufacturers are going to thrive over the next decade, their number one priority must be figuring out a way to bring prospective Gen Y motor vehicle buyers to dealerships. Otherwise, they’re going to lose a chance to reach an entire generation.

Likewise, Toyota, Honda, etc. must be very careful. They have the best shot at getting a Gen Y’er behind the wheel, but if the product doesn’t meet their expectations in terms of quality, reliability, or technological features, they could find themselves suffering from the same poor public perceptions that hurt Ford and GM in the 70’s, 80’s, and 90’s.

References:

• https://autos.yahoo.com/news/trouble-for-detroit–gen-y%E2%80%99s-favorite-cars-are-foreign.html
• https://autos.yahoo.com/articles/autos_content_landing_pages/1523/generation-y-giving-cars-a-pass/
• https://usedcars.about.com/b/2010/01/12/deloittegenysurvey.htm
• https://www.msnbc.msn.com/id/31001393/ns/business-autos/t/gen-y-buyers-prove-challenging-detroit/