Ready to get behind the wheel

Editor’s note: Brian Maraone is project director at Synovate Motoresearch, Troy, Mich.

A great opportunity exists for automakers to target Generation Y. With the number of 16- to 25-year-olds projected to jump from 37.9 million to 42.7 million by 2010, competition for Generation Y’s business will be fierce. However, many automakers do not have an adequate understanding of this youthful market segment, which limits their ability to develop vehicle designs and marketing/advertising campaigns to appeal to this growing population, many of whom are first-time vehicle buyers.

Generation Y includes people born between the 1977 and 1994. The size of Generation Y is linked to the explosion of the Baby Boomer generation, which occurred between 1946 and 1964. This explanation leads many people to refer to Generation Y as the “Echo Boom.”

Generation Y is very different from previous generations. One of the main differentiators is that they are more comfortable with technology than any previous generation. Having grown up with computers and the Internet, they see technology as a tool rather than a barrier to overcome.

Study overview

In August 2002, Synovate Motoresearch Inc. conducted an automotive youth pilot study using an Internet research methodology. The study focused on five areas: general preferences, buyer behavior, purchase influences, brand awareness, and future vehicle considerations and aspirations. The entire survey, with the exception of the general preferences section, was focused on automotive issues.

The survey was designed to answer the following key questions:

  • Who is Generation Y?
  • What types of vehicles do the youth currently own and why?
  • What does Generation Y look for in a vehicle?
  • What kinds of things affect Generation Y’s purchase intentions?
  • What opinions does Generation Y have about specific automotive brands?
  • What type of vehicle and what features does Generation Y want in their next new vehicle?

The nationally representative sample was drawn from the Synovate U.S. e-Panel. The study was in the field for five days. A total of 172 completed surveys were collected, for an overall response rate of 50 percent.

General preferences

The survey began with some general questions regarding music, television, and activities. Pop, rap, and hard rock were the most listened-to music genres with Generation Y. Among the activities participated in, watching TV, surfing the Internet and watching videos were mentioned most. The Internet is a very large part of Generation Y’s everyday life: About half spend at least one to 10 hours per week on the Internet. Only 1 percent indicated that they hardly ever use the Internet.

When asked about favorite automotive Web sites, Kelly Blue Book, Autotrader, manufacturers’ Web sites, Consumer Reports, and Car and Driver were visited the most. These sites provide the information that Generation Y looks for when shopping for a vehicle. In addition, they expose them to the latest trends and styles that automakers are developing.

Buyer behavior

Each respondent was asked what he or she owned/drove the most. Interestingly, four out of the top five models indicated were domestic brands. However, the top vehicle owned/driven was the Honda Accord. Furthermore, it was found that more than half of the vehicles currently owned/driven were used vehicles.

Over the past few years, import brand vehicles have become more popular amongst the youth generation. We found that about 56 percent of our sample that had a new vehicle drove an import brand like Honda or Volkswagen. The market trend seems to be turning away from the “bigger is better” mentality as far as engines are concerned. This is not to say that they don’t want performance; on the contrary, they want performance but don’t feel they need to have big, gas-guzzling V-8s to achieve their performance needs.

Even with the flood of new vehicle buying services, approximately two-thirds of our sample indicated that they still purchased or leased their vehicle from a traditional dealership. It is also interesting to note that of those who purchased or leased their vehicle from a dealership, 95 percent of them picked a vehicle from the lot rather than ordering one from the manufacturer.

Perhaps not too surprising, vehicle cost is a huge influence over purchase decisions, so the majority of vehicles being driven are used vehicles. Price/monthly payments was the most-mentioned reason why they chose their current vehicle over their second-choice vehicle. Value for the money and practicality were also very highly regarded.

Self-expression through vehicle personalization is another dominant theme among Generation Y. This drive is especially evident when you attend shows like Hot Import Nights, which are automotive events geared to young owners. At these shows, automakers and private owners display their vehicles, most of which have top-notch speaker systems, the newest DVD and navigation systems and customized wheel rims.

Thirty-six percent of the sample indicated that they have purchased a radio/CD player for their current vehicle. Navigation systems and DVD players were also among the top tech features desired. Other popular accessories included wheels/tires, extra speakers, and tinted windows. The average amount spent on the accessories was $732.

Purchase influences

Automakers often wonder if it is worth spending huge amounts of money sponsoring certain sporting/musical events and whether it actually affects Generation Y’s automotive purchase decisions. Overall, community involvement, motor sports, sports and concert sponsorships exhibit little influence over this group’s purchase decisions.

Factors that do have influence include test drives, recommendations from family members, visiting dealerships, and Consumer Guide. Amongst the 16- to 19-year-olds, test-drive experiences were still very important, but recommendations from friends were also very important. Peer pressure also plays an important role in Generation Y’s purchase decisions.

Brand awareness

Results from the brand awareness section yielded some interesting pieces of information. Korean automotive brands such as Kia and Hyundai were disliked most by Generation Y because they perceive these brands to be cheap, unattractive and unreliable. Through a perceptual mapping technique, we found that Honda, Volkswagen and Jeep made the most appealing vehicles to Generation Y. They are viewed as innovative, cool and exciting.

Other vehicle issues

Transmission types have traditionally not been such an important thing for automakers to worry about since automatics dominated the market. However, we found that amongst the youth generation, manuals and auto-stick transmissions are becoming more sought after. As stated earlier, performance is important to Generation Y. Manuals and auto-stick transmissions add to the “fun factor” of their vehicle.

The general feeling of Generation Y toward environmentally-friendly vehicles is that they like them and want to drive them. However, our research shows that only a third of those surveyed would be interested in owning an environmentally friendly vehicle for their next vehicle. Some of the reasons for the lack of interest include perceptions that they are underpowered, unreliable and expensive. In addition, most of the current environmentally friendly vehicles have a different exterior styling that doesn’t appeal to Generation Y.

Recently, automakers have been extending their warranty lengths with the hopes of attracting the less-affluent youth generation. More specifically, the length of an automaker’s power train warranty has become a way to gain a competitive advantage. For example, Hyundai offers a 10-year power train warranty, and Chrysler offers a seven-year power train warranty. Our results show that warranty length has a lot of influence over purchase decisions.

Untapped market

Generation Y is largely untapped market that has tremendous potential. The future success of many automakers depends on how effectively they are able to appeal to the youth. While some efforts are currently being made, much more could be done to ensure the loyalty of this important generation for years to come.