Generation Y Car Buyers Gain More Showroom Clout
- Generation Y consumers now make up a larger percentage of U.S. new-vehicle buyers than Generation X, according to a study by J.D. Power and Associates.
- Both groups still lag behind the Baby Boomer generation in new-car purchases, though.
- Gen Y buyers — those born between 1977 and 1994 — are most interested in vehicle costs, alternative powertrains and advanced safety and infotainment features.
WESTLAKE VILLAGE, California — For the first time, Generation Y consumers now make up a larger percentage of U.S. new-vehicle buyers than their older Generation X counterparts, although both still lag behind the Baby Boomers.
According to data collected by the Power Information Network, an arm of J.D. Power and Associates, so far in 2014 Gen Y buyers (those born 1977-‘94) have accounted for 26 percent of new-vehicle retail sales in the U.S., compared to Gen X (1965-‘76) at 24 percent. But Baby Boomers (1946-‘64) are still in the lead at 38 percent.
"As Gen Y consumers enter new life stages, earn higher incomes and grow their families, their ability and desire to acquire new vehicles is increasing," said Thomas King, vice president of PIN. "As new-vehicle demand among Gen Y consumers increases, it will be important for automakers to respond to the needs of these consumers, not only in terms of the vehicle design, but also the marketing, sales and service experience."
PIN data also notes that those in Generation Y, also called Millennials, tend to favor smaller vehicles, with the compact and small-car segments accounting for almost half of their purchases.
The latest research provides additional insight into what the Millennials are looking for in a vehicle.
A recent Deloitte survey revealed that affordability is the primary consideration in a vehicle purchase decision for the Millennial crowd, both in terms of purchase price and ongoing costs, like maintenance and insurance.
Close behind cost to Gen Y consumers are technology-related features, says Deloitte, including alternative powertrains — with 59 percent of those surveyed saying they intend to be driving a vehicle with such a powertrain within the next five years — advanced safety features, and high-tech infotainment systems.
So what are automakers doing to meet the needs of this growing segment of the market?
A Ford report on automotive trends noted that its C-Max Hybrid and C-Max Energi plug-in hybrid are designed to provide both the advanced powertrain technology and fuel efficiency demanded by younger buyers. And the Ford Fiesta and Focus are available at the low entry-level price points required by Millennials.
The online Dealer Marketing Magazine concluded: "Millennials represent one of the greatest challenges and biggest opportunities for automakers. Despite challenging times, dealers and automakers can leverage technology to attract and market to this audience and turn them into long-term customers."
Edmunds says: Gen Y consumers represent new opportunities for automakers and dealers.