DETROIT According to a recent survey conducted by tax and financial consulting firm Deloitte, the future of the auto industry will likely be driven by the choices and tastes of the largest generation since the baby boomers, Generation Y.
The survey, "Connecting with Gen Y: Making Cars Cool Again," sheds some insight into what captures the automotive imagination of this Generation. Though the idea of "cool" varies, the survey found that the underlining qualifications, not up for negotiation, are safety and comfort.
"According to a book by Chris Isidore, "Young and Looking for Wheels," it is estimated that Gen Y "will be buying one out of every four new U.S. vehicles purchased by 2010" and that in a little more than 10 years, they will represent as much as 40 percent of the car market," said Michelle Collins, Deloitte LLP vice chairman and U.S. automotive sector leader. "This percentage, along with the conclusions derived from our Generation-specific survey, makes this new era of the automotive industry one of the most unique and challenging."
Deloitte’s survey discovered that the majority of respondents felt a vehicle reflects a person’s style, status and values, and the factors named most often as among the top three reasons that a vehicle is cool were exterior styling, affordability and being environmentally friendly.
Among survey respondents, 44% said exterior styling was the most important factor in selecting a vehicle, 40% said affordability and 35% said environmentally friendly. These statistics are important as they represent an opportunity for auto manufacturers and suppliers to be creative and turn their new business models into customized programs tailored to reach this diverse market.
One factor that continues to engage this Generation’s imagination is environmental friendliness, which plays an increasing role in their perception of ‘cool.’ What is interesting about this finding is not only their increasing demand for "green" cars but their willingness to pay more.
More than half of respondents said that purchasing or leasing a vehicle made them think about broader concerns, with 62% stating the environment as the most important issue. Of those respondents most, 80%, said they are willing to pay more for a car that is environmentally friendly. Additionally, of those willing to pay more, 62% also viewed vehicles produced in an environmentally friendly factory as a determining factor in their decision.
Gen Y’s Analysis of Their Generation
One of the most startling statistics found within Deloitte’s Gen Y survey is that roughly 70% of this age group would not consider working in the automotive industry. With that sobering realization, this survey could be viewed as a stepping stone to better understand the largest generation since the baby boomers.
However, to truly achieve a more conclusive understanding of what makes this market tick, Deloitte released the survey results to five college teams around the country. Students from Clemson University, Gonzaga University, Michigan State University, Syracuse University and Texas Tech University were asked to analyze the findings and create marketing plans aimed at helping manufacturers understand "Generation Y," the future car buyers and leaders of America.
The students then presented their conclusions recently during a presidential-style town hall forum at the 2009 North American International Auto Show (NAIAS).
"Among the many challenges facing organizations in the current global economic environment, recruiting and retaining the best workers of Gen Y is vital to supporting growth initiatives today and in the future," said Leah Reynolds, Deloitte LLP national practice leader for generational talent strategies and rewards communication.
"Automotive employers specifically have a double challenge, they have to rethink and retool their work environments to be a place Gen Yers would want to work plus, they have to overcome the very negative perceptions the auto industry has as being a good career choice."
A recurring theme among the students’ plans was the need for more connectivity such as in-vehicle Wi-Fi and access to social networks such as Facebook and Twitter as well as the individual customization they crave. The students found that their peers are not satisfied with what they consider their parents’ generation of cars, but instead feel vehicles should be an extension of their lives and as such be customized to fit their ‘always on, always moving’ lifestyle.
However, even though Gen Y is more connected, their buying behavior is heavily influenced by their parents, according to Deloitte’s study. Purchasing decisions have become more about what the car means to them in their lives, with an emphasis on traditional values, specifically attention to quality and honesty.
"Whether it is the economic importance or the technological "coolness" or even the impact on the environment, this is the industry’s chance to listen to the new Generation of customers and emerge as a champion for a more challenging, exciting and some would say sexy, future of the automotive industry," said Collins. "A framework for connecting to Gen Y has been set here today by these students. Companies will approach this in different ways and for different reasons, but it appears clear that some action is better than none."