DETROIT — When it comes to brand loyalty, Generation Y (those born in the mid-80s and into the 1990s; also known as “Millennials” and “Echo Boomers”) will make automotive manufacturer’s work for it, from design all the way through the sale, according to Deloitte LLP.
Deloitte’s new survey, "Gaining Speed: Gen Y in the Driver’s Seat," has uncovered a series of interesting shifts in how this generation, which accounts for more than 20 percent of the population in the United States, views one of their most exciting shopping experiences.
By 2012, Gen Y will account for approximately 40 percent of the car-buying population and represent a new breed of confident consumers who are independent, tech-savvy, engaged and demanding, according to Deloitte. And this is just the group to help rejuvenate the automotive industry, the firm said.
Conducted in collaboration with The Eli Broad Graduate School of Management at Michigan State University, Deloitte’s survey indicates that Gen Y consumers have an increasingly positive view of the industry on everything from researching and shopping to vehicle trustworthiness.
"Gaining Speed: Gen Y in the Driver’s Seat," is Deloitte’s third annual Gen Y automotive survey. This year’s survey, however, not only expands on the knowledge learned from previous years but also takes a deeper look at Gen Y’s attitudes and perceptions of vehicles and the auto industry, and offers unique insights into generational gaps and year-to-year shifts. (Click here for a more in-depth look at the present and past surveys.)
"Our analysis of the survey findings points to technology as a key generational differentiator," said Craig Giffi, vice chairman and automotive practice leader, Deloitte LLP. "For baby boomers, technology is largely utilitarian and defined by safety features, whereas Gen Y views technology as a more personal feature. They see their cars as personal technology cocoons, and expect so-called ‘cockpit technology,’ where they can continue to run their lives uninterrupted, from messaging to music to the latest smart phone apps, 24/7."
The perception of the automotive industry is continuously improving among Gen Y, Deloitte says. More than 82 percent 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 percent and 66.3 percent expressing the same sentiment. As reported in last year’s survey, Gen Y is particularly loyal when it comes to automobile brands, with 42 percent of respondents last year and 48 percent this year saying they expect to be driving the same vehicle brand in five years.
Although Gen Y consumers are loyal, they are fairly unforgiving, with 52.4 percent of respondents agreeing with the survey statement, "A bad experience with a salesperson would cause me never to consider that brand of car again."
"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 percent of Gen Y respondents, up significantly from 69 percent in 2009, said they’d like to test drive a vehicle over 24 hours. The survey also revealed that more than 57 percent 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.
According to the survey, recent product recalls that affected several manufacturers also created uneasiness among consumers, but ultimately will not impact future sales. About 67 percent of Gen Y respondents said that product recalls during the past year were of some concern, but more than 67 percent of total respondents said they would still consider buying a brand despite a recall. This is one reason why vehicle trustworthiness emerged as one of the top three most important factors for Gen Y when purchasing a car along with vehicle quality and safety. However, the survey also shows that Gen Y considers these factors part of any "base package," underscoring their desire for overall transparency and sincerity from dealers and OEMs.
"Automotive companies that can gain Gen Y’s trust by providing superior vehicle safety while capitalizing on their desire for the latest technology are more likely to capture the purchasing power of this important demographic," said Vitale.
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.
