After further research, auto brands’ biggest fears about Generation Y seem to be founded in developing realities: They aren’t as interested in cars per se as previous generations, and the ones who are can’t afford them as easily, according to new research by Deloitte.
But there’s also some good news for the car industry: Millennials haven’t given up on car ownership, and the more technology and alternative powertrains that companies employ in their vehicles, the more likely this demographic cohort is likely to find a way to buy them.
“Cars aren’t at the top of the list but they are on the list for Gen Y purchase consideration, at No. 3 or 4,” Tom Peyton, assistant vice president of national advertising for Honda, told brandchannel. That assumption is driving the new advertising campaign for Honda Civic that is aimed in large part at Millennials. “A lot of them still want a car. I’m not buying into the idea that it’s Armageddon for young buyers.”[more]
Craig Giffi, head of Deloitte’s automotive practice, said the survey showed that “well over half (61 percent) of Gen Y consumers in the Deloitte report expect to buy or lease a car within the next three years.” And 23 percent expect to purchase or lease in the next 12 months.
The most popular vehicles with Gen Y consumers provide connectivity and green energy. More than half want technology that entertains them while they are driving and 57 percent wish it were easier to customize a vehicle’s technology after purchase or lease—a challenge that auto brands are feverishly addressing these days.
Also, about 59 percent think they will be driving an alternative-engine vehicle five years from now, with more than a quarter (27 percent) citing hybrid electrics as their preferred type of alternative propulsion. Contrary to the mythology that has sprung up around all-electric vehicles, only 7 percent said they’ll be driving them five years from now.
The study also did its part to pop some other myths about the nascent regime of “urban mobility” to which carmakers are paying a lot of attention. Despite the rising notion that Millennials don’t care about cars in part because they don’t mind using mass transit or sharing automotibles, the Deloitte study showed that only 29 percent of Gen Y consumers would be willing to give up their personal cars. “A mere 8 percent do not expect to ever purchase or lease a vehicle,” Giffi said.
The biggest obstacle to Millennial car ownership isn’t their own predilections but cost and their financial situations, which for many have been exacerbated by the low-growth American economy in which they’ve come to adulthood. About 80 percent of Gen Y consumers who don’t own or lease a vehicle right now cited cost as the main barrier, both purchase and operational. About two-thirds said their lifestyle needs now are met by walking or public transportation, while 40 percent said their lifestyle needs are met by car borrowing and car sharing.
And that leads to another reason for hope for carmakers about Generation Y: As the US economy presumably continues to recover, and this cohort forms more families and has more children, their resources and needs to buy vehicles—and bigger ones—will grow apace. A similar study conducted five years from now might find Millennials looking more and more like the automotive-ownership profile of their parents.