(Updates with analyst’s comment in ninth paragraph.)
Jan. 16 (Bloomberg) -- While young consumers may not be as passionate about cars as their parents, most still plan to buy or lease one within the next three years, according to a new study. And they would like it to be a fully connected hybrid.
In a global survey of consumers, 61 percent of the cohort known as Generation Y say they intend to acquire a car in the next three years, with almost a quarter indicating they’ll get a new set of wheels within 12 months. Only 8 percent of consumers born between 1977 and 1994 said they will never buy a vehicle, according to the survey by Deloitte LLP.
Automakers such as Ford Motor Co. and General Motors Co. are increasingly targeting younger drivers through methods such as social-media ads amid concern they aren’t interested in cars. The study’s findings offer insight into how to get them into the showroom. While horsepower isn’t a lure, Internet access and fuel savings through gasoline-electric hybrids is.
“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,” Masa Hasegawa, a principal at Deloitte Consulting LLP, said in an e-mailed statement.
“Gen Y consumers across the board also want safety technology, especially features that mitigate the risks of distracted driving.”
Automakers and other marketers are keen to crack the code on selling to this younger demographic, a group of about 80 million consumers in the U.S. that’s almost as large as the Baby Boomer generation born after World War II. Yet automakers have said that winning over Generation Y is challenging because they are not as enamored with cars as their parents.
With 48.8 million consumers planning to purchase or lease a car in the next three years, the opportunity to cater to this generation is coming on fast, according to the study. Making that purchase affordable is the top priority to Generation Y.
“Affordability is the mantra for Gen Y consumers who don’t already own or lease a vehicle,” Craig Giffi, vice chairman of Deloitte LLP, said in a statement. “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.”
Some 64 percent of Generation Y consumers told Deloitte they love their cars, yet they are three times more likely than other generations to abandon their vehicles if they become too costly.
“It’s not that they don’t want vehicles or that they don’t like vehicles,” Giffi said on a conference call with reporters today. “They just can’t afford them.”
Young consumers want fuel efficiency to come from new technology, with 59 percent saying they expect to be driving a car with an alternative powertrain in the next five years. Hybrid electric cars are the group’s preferred vehicle, with 29 percent saying they would opt for that propulsion system.
And while Generation Y is more open to new forms of mobility like car-sharing, only 29 percent say they would be willing to give up their vehicles, the study found.
Generation Y also doesn’t harbor as many negative feelings toward car dealers as their Baby Boomers counterparts. Some 41 percent of Generation Y consumers have positive attitudes toward auto dealers, compared to 22 percent of other generations, the study found.
For its report on global mobility, Deloitte polled about 23,000 consumers in 19 countries, including more than 2,000 in the U.S. That U.S. group included 677 Generation-Y consumers.
Mark Fields, Ford’s chief operating officer, said this week that automakers need to understand younger buyers, also known as millennials, “in a whole new way.”
“When they do buy cars, millennials expectations of car ownership could parallel their expectations of technology, where upgrading every two years is the norm,” Fields said Jan. 14 at the Automotive News World Congress in Detroit.
--Editors: Niamh Ring, James Callan