DETROIT – Contrary to popular belief, members of Generation Y do aspire to vehicle ownership, says a panel of university students assembled here by consulting-firm Deloitte LLP.
Students from the University of California-Los Angeles, Michigan State University, Columbia University and Carnegie Mellon University recently were provided with data gleaned from a Deloitte-sponsored survey sent to members of Gen Y, a term used to describe 19- to 31-year-olds.
The survey also was sent to a smaller number of Baby Boomers, whose first wave dates back to 1946.
As the largest generation since the Baby Boomers, auto makers have been scrambling to find ways to connect with Gen Y, which the U.S. Census Bureau estimates is 77 million-people strong. This, despite pundits who claim the group would rather use public or other means of transportation than own a vehicle.
“There are myths in the media about Gen Y, suggesting (they are) buying (fewer) cars than older generations,” says Bob Filbin, a Columbia student.
Yet, data gleaned from the survey indicates Gen Y spends nearly as much on gasoline to fuel their vehicles as their older counterparts. However, a disconnect does exist between Gen Y and older generations, he says.
For example, “the average income of Gen X (aged 34-45) is a lot higher than Gen Y. Gen Y has an average income of $50,000 annually, while Gen X earns $70,000 to $80,000 annually.”
This income discrepancy is causing members of Gen Y to purchase used vehicles, rather than new. “Of the $40 billion spent by Gen Y on vehicles in 2009, $30 billion went toward used cars,” Filbin says. “So the major challenge for the industry is to figure out how to get Gen Y to switch to new (vehicles).”
Buying a used car allows younger buyers to own a vehicle with all the options they want without breaking the bank, he adds, noting the Deloitte survey finds more than 69% of Gen Y car buyers will purchase a used vehicle in the future.
Fellow-presenter Columbia student Nichole Scalamandre agrees vehicles with the latest technology are an important reason to buy more-affordable used cars. “Growing up with technology changed the way (Gen Y) evaluates vehicles. Older generations are more concerned about customer service, reliability, price and maintenance.”
The Deloitte survey finds technologies such as mobile messaging, connectivity to portable music players and mobile phones rank high on Gen Y’s purchase-consideration list.
Another key point of the survey is the importance Gen Y places on the shopping experience, itself. If auto makers cater to Gen Y’s needs, they likely will have devoted customers. But if they don’t, Gen Y tends to hold a grudge.
The survey finds 82% of Gen Y consumers say they are excited to shop for a vehicle. That compares with 71.2% of Gen X and 66.3% of Baby Boomers. However, 52% of Gen Y respondents say a bad experience with a dealer would cause them never to consider that brand again.
“Research shows companies should use the power of the Internet to reach consumers,” Scalamandre says.
“(Gen Y) is going online to learn about products, and there’s an opportunity (for auto makers) to create a sales channel. Some (buyers) don’t want to go to a retail store and buy a car there, so (the manufacturers) should provide multiple options for different customer segments.”
Michigan State University students Scott Smith and Shana Red delve even deeper into how the dealership experience relates to Gen Y.
“When Gen Y (buyers) evaluate autos, they expect (good) design and quality,” Smith says. “So the opportunity for (auto makers) to differentiate (themselves) is in the (dealership) arena.”
A positive dealership experience is three times more important to Gen Y, the study finds, and although no auto maker was a standout among respondents remarking on their shopping experience, some performed better than others.
“Most imports scored higher, but not many scored higher than seven on a scale of 10,” Smith says. “So there’s a lot of white space on top of the scale.”
Of the top mainstream brands,was lauded for providing the best low-pressure showroom experience, while was recognized for “going the extra mile,” survey respondents said. was described as the most “authentic” brand; Jeep gave shoppers the most “respect;” and Acura got kudos for “understated luxury.”
Red says the dealership experience is more important to Gen Y’ers because most conduct research ahead of time.
“When we walk into a dealership, we already have information. So dealers who go the extra mile are greatly appreciated, and we’ll tell everyone we know,” she says, noting it’s also important for the sales staff to treat Gen Y with respect.
“Gen Y is typically 15 years younger than the salesperson, so some (car buyers) feel like they are not being taken seriously,” Red says.
Being able to personalize a vehicle and the desire to be “heard and understood” also are considered important to respondents, according to members of the Carnegie Mellon team.
Student Ben Garber says auto makers need to forge a “circle of trust” with Gen Y. “Forty-percent of Gen Y have tattoos, but 70% hide them (on parts of their body) where only people they trust can see them,” he says. “That’s a circle of trust (auto makers) want to get inside.”
And although Gen Y, like other motorists, use their vehicles primarily to get from point A to point B, tailoring the vehicle to an individual’s tastes can make it more “desirable,” Yash Shah, of Carnegie Mellon, says.
Gen Y also likes to be connected at all times, he adds, noting in-vehicle Internet connection ranks high on the respondents’ list.
The UCLA team focused on how Gen Y views domestic and foreign brands, ranking the top 15 by respondent’s preference.
“is winning across all generations, followed by ,” says UCLA student Kevin Raymond. “As we move to the middle (of the list), we see and Chevy, with Ford out in front of U.S. brands.”
DespiteCo.’s efforts to market its Buick brand to a younger crowd, the survey indicates the strategy is not working. Boomers rated the marque as average, while Gen Y is “not on Buick,” Raymond says.
Overall, foreign brands outperformed their domestic counterparts in this year’s study, with 73% of respondents preferring import brands, up from 48% in 2009.