BY DESIGN

Ford design chief J. Mays calls it the 10-year-old-boy test: "When a kid sees a car on the street he has to instantly be able to say 'Oh, that's that fill-in-the-blank Ford.' They've got to identify it instantly and they've got to like it."

And if not?

Then you're toast in 2007.

Automotive designers always have wanted to create cars and trucks that make kids stop and stare, but now it has turned into a deadly serious quest. Today's children ranging in age from 5 to 22 are Generation Y, the most pivotal demographic group since Baby Boomers - their parents.

For the past 30 years, the tastes of Baby Boomers aged 36 to 54 have controlled the automotive marketplace. Enormous in number (77 million strong just in the U.S.), affluent and acquisitive, they helped turn a couple of motorcycle companies - BMW AG and Honda Motor Co. - into global powerhouses and Toyota into the world's third-largest automaker.

At the same time they diminished the industrial might of traditional American auto companies and decimated Plymouth, Cadillac and Mercury, along with a dozen other brands popular with their parents. In North America they killed off station wagons and Detroit's big sedans and embraced two new types of vehicles: minivans and sport/utility vehicles (SUVs).

Now hitting the peak of their earning years, status-hungry Boomers still are driving the marketplace. They are the force behind the exploding luxury vehicle market worldwide, and they pushed sales of Mercedes-Benz and Toyota's Lexus ahead of Cadillac and Lincoln in the U.S. for the first time since anyone started keeping track.

But the leading edge of the Baby Boomer generation is creeping toward retirement and declining income, and marketers can see their influence waning in the not-to-distant future. By 2007, two post-Boomer demographic segments, Generation X (current ages: 23 to 34) and the younger Generation Y (also known as Echo Boomers) are predicted to account for 40% to 45% of total vehicle sales in the U.S. They are expected to totally eclipse Boomers in power and influence by 2025. It will be the same story in Japan and Europe.

The U.S. Census Bureau estimates that there are 122 million people younger than 35 in the U.S. alone, compared with 77 million Boomers.

Generation X, consisting of only about 45 million, is relatively small, and its members continue to stymie mass marketers because they tend to be very skeptical, with hugely diverse tastes. But Gen Y, by almost all accounts, is a mass marketer's dream. They are huge in number - 70 to 80 million strong, depending on who's counting - very brand conscious and are expected to be the most affluent generation in history.

Maybe you couldn't afford to buy a new car until you were 30, but automakers are betting many Echo Boomers will be a force in the new-car marketplace at very young ages.

When it comes to Gen Y, it's never too soon to start trying to appeal to them. That's why Ford Motor Co., General Motors Corp. and DaimlerChrysler already are scrambling to figure out Gen Y's likes and dislikes with studies and focus groups. They don't want to make the same blunders that cost them so dearly with the Boomer parents.

Meanwhile, companies like Toyota Motor Co. that have done extremely well appealing to Boomers are trying to maintain their momentum by winning over Boomer children as well, but some are not enjoying success. Toyota executives freely admit they're struggling to appeal to buyers under 35 in Japan, North America and Europe, while competitors such as Honda Motor Co. and Volkswagen AG are faring better.

Somehow, while the median buyer ages of most other automakers have crept steadily upward, Honda and VW have been able to hold the line. The median age of the typical Camry buyer, for instance, has risen from 47 to 51 in the past 10 years, while Honda Accord buyers still are only 45 - up from 40 in 1989. VW Jetta buyers at 33 are far younger, and only a year older from 1989, according to Maritz Marketing Research Inc.

"Honda began as a motorcycle manufacturer. It also was the last company in Japan to produce cars," says analyst Kunihiko Shiohara of Goldman Sachs (Japan) Ltd. "Because of this motorcycle tradition, the company is able to utilize its brand image built up among students and other younger people who use scooters and motorcycles as their main means of transportation. Basically, this motorcycle business gives Honda a natural linkage to the younger generation."

Mr. Shiohara also notes that the company's racing activities help attract a younger customer base. It cultivates an image of 'freshness' and 'activeness' that younger consumers, in particular, admire.

Mr. Shiohara also says that Honda employees, more than those at Toyota and Nissan, are "enthusiastic" about cars. This, he says, translates into design and marketing strategies.

Not surprisingly, Gen Y and Gen X have very different tastes in automotive transportation from their parents or Boomer automotive designers. Some, at least, are bored with traditional automotive shapes and curves, and this is forcing designers to look outside automotive to develop what is called a new "design vocabulary." This in turn has led to a flurry of highly unusual concept and production vehicles that are exciting to some and shocking to others.

"Recently, quite a few young people have shown they are tired of the current car design vocabulary," says Shiro Nakamura, Nissan Motor Co. Ltd.'s new General Manager of Design. "They are surrounded by lots of good product design (in electronic products and other consumer items), but product design and car design now are quite disconnected."

The newest car designs are experimenting with combining product design, car design and sometimes other consumer trends - such as retro, furniture design or wireless Internet accessibility - into exotic new fusions that will hopefully click with young consumers. Among them:

Toyota WiLL Vi. A combination of retro and product design, it went on sale Jan. 17 in Japan. Based on the Vitz platform, it's aimed at Japanese women in their 20s and early 30s, and is focused on symmetry and simplicity with a strong retro feel.

And this isn't 50's retro, but turn-of-the-century retro. The externally hinged trunk and manually operated canvas roof suggest a carriage. The body design also features lots of sharp angles, as if it is made of plates bolted together - a common feature of many vehicles admired by Gen Yers.

Think Hummer. Inside, the WiLL Vi has a non-automotive, architectural look - another trend for Gen Y vehicles. It was designed more like the interior of a room than a car. "Rather than feeling encapsulated by a conventional interior, occupants feel as if they are hanging out in their home - or maybe even as if wearing a favorite sweatshirt," Toyota says.

WiLL Vi is the first car produced by Toyota's Virtual Venture Company (VVC) aimed at winning the favor of 20-somethings. The brainchild of Toyota President Fujio Cho, it consists of about 40 employees with an average age of 36. In 1998 Toyota also launched a U.S. version of VVC called the Genesis group (see WAW - June '99, p.30).

Honda Fuya-jo. Mocked as "the toaster" by some, this car tries to incorporate Japanese Gen Y dance club culture and architecture with a car. The four seats are more like bar stools and are designed to provide the same sort of experience as riding a skateboard or Rollerblades. Most middle-aged journalists and designers laughed it off, but it stirred enormous interest among young Japanese at last year's Tokyo Motor Show. Now serious designers are gulping hard and wondering what to do next.

Ford O21C. Created at the behest of Ford Design Vice President J. Mays by renowned designer Marc Newson - who never has designed a car before - O21C is a different type of exploration into merging non-automotive product design with automotive. Mr. Newson wrapped his creation around a stretched Fiesta chassis that will be the basis for Ford's next-generation small-car platform. It has provoked lots of interest among Mr. Mays' young target audience, and just plain provoked a few middle-aged auto journalists.

Ford 24.7. Another envelope-stretching idea from Ford's Mr. Mays, the 24.7 is more about communications and connecting with the Internet than it is about car design. Its primary feature is the ability to keep drivers and passengers connected with friends, family and the outside world 24 hours a day seven days a week - hence its name - via wireless telephone and Internet connections.

"Where we have accepted computers, Gen Xers and Gen Yers have embraced them. And there is a very big difference. They're looking for performance out of their automobile that is very different from what I would say a standard Baby Boomer would want. What we want traditionally is about horsepower. Their kind of horsepower is measured in gigabytes and pipeline bursts. It is a very different way of looking at the automobile."

But 24.7 also features a voice-activated electronic instrument panel that allows the driver to customize it by changing the speedometer, fuel gauge and clock with simple voice commands. Reconfigurabilityis a recurrent theme in Gen Y designs.

Not surprisingly, the Boomer-dominated automotive journalism community is having a tough time appreciating some of these new trends. And no wonder, they haven't had to defend their basic tastes and values against a powerful opponent since they argued with their parents over hair length and the Vietnam War back in the '60s.

The new youth-oriented concepts "have a much more product design-like feel to them," acknowledges Mr. Mays. (The 021C and 24.7) are not about swoopy flowing lines. They're about elements that fit together almost like a construction-like architecture does. It's a very different take on what an automobile exterior could look like."

Acknowledging that the O21C in particular has had its share of critics, Mr. Mays points out that it also has won lots of kudos and awards from - ahem - younger folks. "The traditional automotive journalist, 45- to 50-year-old white male, didn't get it, but all of our audience did," he says. "We're not trying to provoke shock from the older audience. We're just saying, 'Look, there's a customer base out there that goes beyond the taste of a 45-year-old automotive journalist.' We're not going to suddenly start producing a lot of ugly, wiggy cars. We've got some very traditional offerings as well," he says comfortingly.

John Herlitz, senior vice president-product design at the Chrysler side of DaimlerChrysler has a little more pragmatic solution for appealing to 10-year-olds. "Our specific programs are called Viper and Prowler," he says with a chuckle. "That's what the kids want to go for."

But Chrysler's real response is less glib: the unusual PT Cruiser. It's expected to go right to the heart of the youth market, especially with its retro design and $16,000 base price.

"In general, we're trying to develop pro-ducts that try to separate us from the rest of the pack. That notion gave rise to the PT Cruiser." However, Mr. Herlitz says, he doesn't have any cars like the Honda Fuya-Jo or Ford O21C in the works. "No thanks," he laughs.

GM doesn't either. Or at least GM Vice President of Design Wayne Cherry doesn't intend to display them to the public. GM is devoting massive resources to pursuing the youth market, including having a cultural anthropologist on staff to work with designers so they can better understand and incorporate various life-style issues with new designs.

GM also has hired an "unprecedented" number of young designers and sculptors the past year and is giving them much more responsibility. Young designers used to go through a lengthy apprenticeship at GM, where they might spend years designing minor items like door handles. Now new hires often are allowed to create an entire new vehicle in an effort to take advantage of their fresh perspective.

"A lot of people for years thought the ultimate vehicle for young people was the 2-seat roadster," says Mr. Cherry. "Nowadays that's not the ultimate vehicle. They want to take their friends and their stuff with them. They have lots of stuff (like in-line skates) now."

That type of thinking drove the design of the upcoming Pirana show car which will debut at the Chicago Auto Show and the new Pontiac Aztek crossover vehicle. One Aztek feature gleaned from youth studies: Stereo system controls near the tailgate. That's because they expect Aztek owners to spend a lot of time doing the Gen X and Y equivalent of tailgating.

Studying activities - not doing extensive "generational" research - is what led to the success of the Nissan Xterra, a lower-priced SUV aimed at the youth market, says Jerry Hirshberg, President, Nissan Design International.

"The first thing we did was determine not to target these abhorrent, marketing-derived terminologies that classify people into groups - like Xers and Boomers and Yers and all the rest of it. I've always felt that television programmers and pants designers and automobile designers always missed exactly what I want because they generalized," he said.

"The smartest thing we did that lent credibility was to not target a named market segment,but to target a cluster of activities, of actions, of ways people lived with their vehicles. We went out and observed sites where people were doing things most people connect with sport-utes, and we were surprised that we didn't find many sport utes. We found trucks, cars and modified vans."

So instead of building a cute little "beach toy" or a lumbering land barge, Mr. Hirshberg and his team thought of the Xterra more like a pair of well-worn jeans on wheels. "We literally thought about designing forms that would look as good scuffed and worn and scratched as they do new.

"One of the things that we were unsuccessful in selling the sales department on is that we wanted to introduce this car pre-scuffed (like stone-washed jeans). "We actually wanted that very badly." While Mr. Hirshberg lost that battle, he certainly won the war, and the Nissan Xterra is providing struggling Nissan with a badly needed home run in a crucial segment.

It's a success every automaker would like to replicate, now and in the future.

But being "hip" is extremely difficult in the automotive industry, given lengthy product development lead times and even longer product lifetimes.

In fast-moving industries such as fashion, electronics and e-commerce, looking down the road seven or 10 years from now in anticipation of a generational changing of the guard sounds like an eternity. But in the auto industry, where it still takes three years or more to bring a new car or truck to market, 2007 is frighteningly close. That leaves very little time to develop completely new families of products for two generations with wants, needs and tastes very different from Boomers.

That's leading to the creation of tiny "boutique studios" to help answer the need - in a hurry. Every design boss seems to want at least one, preferably a couple. They exist, essentially, to pick up on trends in colors, materials, graphics, fashion and architecture and apply them to cars in a way that's not possible in myopic Detroit, Gothenburg or Wolfsburg.

Ford has just announced plans to open a small studio, staffed by younger designers, in London, even though it already has design centers in Dunton, Cologne and Turin in Europe, not including Jaguar and Volvo studios.

"London," says Ford's Mr. Mays, "is the place you have to go to understand youth culture."

GM is thinking of setting up a tiny design office in Milan, the home of Italy's fashion and furniture design, and is looking at other locations around the world, including London. Mr. Cherry, GM's design boss, likes to call them, "satellite listening posts."

Officially, GM won't confirm the plans and prefers to point out that it already has a studio just outside Turin. It also already has a small studio in Shanghai, China, where VW's design department recently opened an office, and a small facility in Birmingham, England.

Recognizing that its early '90s decision to close its advanced studio in California may have been a mistake, GM is opening a new studio there in Los Angeles. The new operation, with around 40 people, is to be run by Frank Saucedo, the talented designer who styled the Vauxhall Tigra before being posted from Germany to LA.

GM's trying to get itself out of the design doldrums and has been hiring aggressively. Last year, another 220 heads were added to the GM design staff, five times the budget, if rumors in Detroit are accurate. And many of them are young.

Ford, too, seems to have opened the coffers, at least when design is involved. Apart from specific Blue Oval operations, Volvo is setting up a studio in Barcelona (it already has one in California), while Jaguar has announced plans for a separate advanced studio, even if it's still in England.

Ford also has Ghia, with its long-standing ability to handcraft running prototypes designed in-house. Mr. Mays has talked of a Ghia revival, including replacing the existing, rather cramped and rundown building, which Ford rents, with a new studio outside Turin.

Mercedes-Benz, too, believes in the idea of small, advanced, studios. Two years ago it set up an advanced studio in Como, Italy, to research interior design and materials, and has others in Yokohama, Japan, and Irvine, CA, as well as one in the new Sindelfingen, Germany, design center. And the merger with Chrysler gives M-B access to its hugely talented design staff in various studios.

So the next time you see a couple of 10-year olds, show them some respect. In the not-too-distant future, they're going to rule the world.