DETROIT — At 75 million strong and coming of age, Generation Y may have what it takes to re-shape the wavering U.S. automotive industry, a new survey says.
Titled "Connection with Gen Y: Making Cars Cool Again,' the study, conducted by Deloitte LLP and The Eli Broad Graduate School of Management at Michigan State University, shows that Gen Y consumers may have an increasingly positive view of everything from auto jobs to American-made vehicles.
Fifty percent of respondents indicated that the idea of working in the U.S. auto industry was not appealing to them, compared to 70 percent in last year’s survey.
“A twenty point shift over a year may be indicative of a change in perception of the industry,” said Michelle Collins, vice chairman and U.S. automotive sector leader, Deloitte LLP. “Among the list of challenges facing companies in the current economic environment, recruiting and retaining the best workers is vital to supporting growth initiatives today and in the future.”
Gas Mileage, Federal Bailouts and New vs. Used
Gas mileage and vehicle affordability emerged as the most important considerations for the Gen Y respondents purchasing cars, as opposed to a year ago when data showed safety was their number one decision-making factor.
Forty-four percent of respondents indicated they preferred to purchase a vehicle from a brand that did not accept federal bailout funds. Similarly, only 36 percent reported they would consider buying a vehicle from a company that is or has recently been in bankruptcy.
Gen Y consumers may also be taking the value proposition of used cars versus new cars a lot more seriously. According to the survey, more than 63 percent of Gen Y respondents believe used vehicles are a greater value than new vehicles and they’re more than three times as likely to purchase used over new. “Generation Y is typically a group that thinks “newer is better,” but as the economy is slow to recover and jobs are hard to find, this generation may help reshape the car buying process,” said Collins.
Made Green and in the U.S.
The survey also showed that Gen Y respondents are loyal to brands manufactured in the U.S. The survey showed that the “Made in the USA” label still carries a lot of weight among respondents. More than 52 percent stated it’s important that the vehicle be manufactured in an American factory no matter what brand it is. Additionally, nearly half (42 percent) of respondents reported they expect to be driving the same vehicle brand in five years, and that’s up a little more than 15 percent from last year’s survey where only 27 percent indicated that they expected to be driving the same brand five years later.
Though the responses suggest the make of the vehicles Gen Y drives won’t be changing, the model these consumers drive will likely change drastically over the next five years. According the survey, SUVs are making a comeback. As the economy slowly rebounds and the price of gas remains lower than 2008, the demand for SUVs is increasing. Nearly 1 in 4 (23 percent) respondents from this year’s survey indicated that they see themselves driving an SUV in five years, up from only 11 percent last year.
While bigger may be making a comeback, one thing is certain to the respondents, green is here to stay and they are willing to pay more for it. The majority of respondents (64 percent) stated they were willing to pay more for a vehicle that was either environmentally friendly or one that saves money on energy costs. Nearly three-fourths (73 percent) of respondents declared the environment as an extremely important factor when purchasing a vehicle, and nearly half (49 percent) believe the type of vehicle they drive “makes a concrete difference in addressing global and local concerns about the environment.”
Vehicle Research and Shopping
Some interesting trends also emerged about Gen Y’s likes and dislikes when it comes to vehicle shopping. Social media sites and blogs may be one of the most popular ways for Gen Y to communicate, but they may not help sway purchasing decisions when it comes to automobiles.
According to the Deloitte survey, nearly 60 percent of Gen Y respondents reported they do not look for advice or information on blogs or social media forums before purchasing a vehicle. They tend to turn to online search engines to find information on vehicles and they trust auto manufacturers’ sites the most.
When it comes to physically going into a dealer, the Gen Y respondents are largely unsatisfied with the overall dealership experience. No haggle is the preferred method of doing business with them. The survey showed that 85 percent of respondents would prefer to know the final selling price upfront and more than 60 percent stated they would prefer to skip pricing negotiations altogether with a salesperson. Additionally, the majority indicated that they are anxious when a dealership salesperson approaches them and they would prefer to have the sales process occur over the Internet without any face-to-face interaction.