Dude, Here's My Car: Gen Y Shows Interest in Vehicle Ownership
DETROIT--Jan. 16, 2014: Gen Y consumers are showing a clear interest in vehicle ownership and have specific ideas of what they want in a car, according to Craig Giffi, vice chairman, Deloitte LLP, and automotive practice leader.
Citing data from a Deloitte report on global mobility, Giffi said that while young consumers view car ownership as less important for mobility than previous generations, they are, nonetheless, excited about affordable, technology-enabled vehicles – especially hybrid electric cars.
Deloitte's soon-to-be-released report is based on survey responses from more than 23,000 consumers across 19 countries, including more than 2,000 United States consumers – 677 of whom were from the Gen Y demographic (born between 1977 and 1994).
The results indicate that while America's romance with the car does not extend to Gen Y, the nearly 80 million Gen Y consumers in the United States are not giving up on car ownership.
"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," says Giffi, who adds that "almost a quarter (23 percent) expect to purchase or lease in the next 12 months – and a mere 8 percent do not expect to ever purchase or lease a vehicle."
Further, only 29 percent of Gen Y consumers would be willing to give up their personal cars, even as non-traditional mobility options like car-sharing and car-pooling services proliferate.
Among Gen Y consumers who do not currently own or lease a vehicle, cost seems to be the main barrier – with most (80 percent) saying it is because they cannot afford it and three quarters citing high operational and maintenance costs. In addition, 67 percent said their lifestyle needs are met by walking or public transportation, while 40 percent said their lifestyle needs are met by car borrowing and car sharing.
"Affordability is the mantra for Gen Y consumers who don't already own or lease a vehicle," says Giffi. "When asked what purchasing criteria matter most to them, a majority cited cost-related items such as the vehicle's price tag, fuel efficiency and payment options."
So what does Gen Y want in a car? Most Gen Y consumers – whether they currently own a vehicle or not – demonstrate a clear affinity for cars and trucks with alternative powertrains. More than half (59 percent) think they will be driving an alternative engine vehicle five years from now, with more than a quarter (27 percent) naming hybrid electrics as their single most preferred type of alternative engine – far ahead of plug-in hybrids (8 percent), all-battery electric vehicles (7 percent), and fuel-cell vehicles (4 percent). What is more, they would like the government to help defray the higher costs of alternative powertrains, with 58 percent saying they would support government programs that reward consumers for choosing alternative/high-efficiency engines.
"Gen Y consumers across the board also want safety technology, especially features that mitigate the risks of distracted driving," says Masa Hasegawa, principal, Deloitte Consulting LLP. "Almost three quarters (72 percent) want technology that recognizes the presence of other vehicles on the road and 63 percent want technology that lets them know when they have exceeded the speed limit."
Plus, more than half (56 percent) 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. And more than half would like to connect their smart phone to use all its applications from the vehicle's dashboard interface.
"While Gen Y may not necessarily scrutinize horsepower, acceleration times or engine size, they do have clear needs, wants and desires, especially when it comes to remaining connected to all of their lifestyle technology while on the road," says Hasegawa. "This is good news for car makers, who already offer – or are bringing to market – many of the features Gen Y consumers most want in a vehicle."
An opportunity for the auto industry Deloitte's soon-to-be-released report indicates that Gen Y consumers bring an open mind to the car-buying process, taking their customer experience cues from outside the industry. They expect their automotive shopping experience to be similar to their retail and technology experiences.
"This is a great opportunity for car makers and dealerships to reinvent themselves," says Joe Vitale, Deloitte's global automotive sector leader.
Vitale points out that 41 percent of Gen Y consumers have a positive attitude towards automotive dealers – an almost two-to-one margin over other generations, which top out at 22 percent on average. And 40 percent of Gen Y consumers say the salesperson at the dealership has a major or significant impact on their vehicle purchase, well above the 27 percent of consumers from other generations saying so. Further, 53 percent of Gen Y consumers feel that auto manufacturer websites have a major or significant impact on their vehicle purchase, compared to only 35 percent of other demographics.
"For baby-boomers and other generations, it was just sort of assumed that buying a vehicle was going to be a somewhat unpleasant process," says Vitale. "But Gen Y really doesn't view it that way; they are looking to the auto industry to collaborate with them as they move toward car ownership."
According to Candan Erenguc, senior manager, Deloitte Consulting LLP, dealers and auto manufacturers could "create new business models that integrate with the non-traditional mobility options favored by Gen Y."
Based on the report, 42 percent of Gen Y consumers claim they would be willing to use car-sharing, car-pooling or similar services if they were readily available and convenient – and a similar amount (39 percent) say they would be willing to try a car-sharing app that was recommended by a friend or relative. Yet, they also have concerns, with 57 percent worrying about safety, security or privacy when ride-sharing.
"For respected and established auto brands, this could be a chance to cater to an open-minded group of buyers with trusted products and services that didn't even exist a few years ago," concludes Candan.