Gen Y to Account for Nearly 40% of Car-Buying Population by 2012; Influence Other Consumer Segments
By 2012, Gen Y consumers will account for approximately 40% of the car-buying population and represent a new breed of confident consumers who are independent, tech-savvy, engaged and demanding, according to a new survey by Deloitte. Conducted in collaboration with The Eli Broad Graduate School of Management at Michigan State University, the survey indicates that Gen Y consumers have an increasingly positive view of the industry on everything, from researching and shopping to vehicle trustworthiness. As the automotive industry continues on the road to recovery, the Gen Y consumers may be just the group to help rejuvenate the industry.
The perception of the automotive industry is continuously improving among Gen Y. More than 82% of Gen Y consumers say they are excited to shop for a vehicle, which is especially important as enthusiasm has subsided among Gen X and baby boomer respondents with only 71.2% and 66.3% expressing the same sentiment. As reported in last year's survey, Gen Y is particularly loyal when it comes to automobile brands with 42% of respondents last year and 48% this year saying they expect to be driving the same vehicle brand in five years.
"One area we found very interesting is Michigan State University's analysis that the actual car shopping experience is three times more important to Gen Y than vehicle design," said Joe Vitale, who leads Deloitte's north central region automotive practice and Generation Y research program. "This shows that much like their demand for technology, the shopping experience for Gen Y must be experiential, as well as connect and integrate to their "personal technology cocoons" across the evaluation, sales and post-sales cycles."
Some interesting trends emerged about Gen Y's opinions on the dealership experience and vehicle shopping. In visiting a dealership, Gen Y respondents said they are still largely unsatisfied and anxious with the overall experience, and suggest that the main reason for a dealer visit is to test drive a vehicle. A little more than 82% of Gen Y respondents, up significantly from 69% in 2009, said they'd like to test drive a vehicle over 24 hours. The survey also revealed that more than 57% would prefer to avoid face-to-face interaction with a dealer altogether and work with them solely over the Internet. These findings suggest that dealers could benefit from increasing transparency with consumers by making basic product information more readily available.
Regarding shopping, an automotive company's buzz in the virtual world matters a great deal. Social media sites and blogs are increasingly becoming one of the most popular ways for Gen Y to communicate, ultimately helping to sway purchase decisions among automobiles. The research done by Gen Y shoppers is broader and deeper; with these buyers significantly more likely than older generations to use friends, websites and blogs to gather purchase information. According to the Deloitte survey, nearly 67% of Gen Y respondents look for advice or information on blogs or social media forums before purchasing a vehicle, up dramatically from 25% in 2009.
Compared to Gen X and baby boomers, Gen Y consumers are most likely to influence others, but are also susceptible to being influenced by their peers. Roughly 70% of the Gen Y respondents said they're likely to sway a friend's vehicle purchase; only 60% of Gen X and 50% of baby boomers claimed the same. In particular, Gen Y has a large amount of influence over their parents – slightly more than 61% say they directly influence their parents final purchase decision. On the flip side, 88.7% ask friends for their opinions about a brand or model before buying a car, and 79.6% of these respondents say that their friends have a big influence on their purchase decision as well. Deloitte's survey found that Gen Y consumers are very influential overall and will actively promote a brand, even if they don't buy the car.
"Authentic, direct and personal engagements with Gen Y consumers are even more important than advertising campaigns for reaching Gen Y," said Craig Giffi, vice chairman and automotive practice leader, Deloitte LLP. "According to the survey, Gen Y consumers actively share opinions and exert their influence far more than older generations, using the virtual world of social media to reach a never-ending audience."
By providing Gen Y with an ongoing, positive customer experience that has the same amount of innovation, dedication and information found in the cars that drew them to the brand initially, manufacturers will be able to take advantage of the influence this generation has over other consumer segments.[Source: "Gaining Speed: Gen Y in the Driver's Seat." Deloitte's North American Automotive Practice/Eli Broad College of Business, Michigan State University. 13 Jan. 2011. Web. 11 Feb. 2011.]