News - General News - Sales
Survey puts spotlight on Gen Y car buyers
Car buying intention strong among Gen Y but priorities different to their parents
29 Jul 2014
By IAN PORTER
A NEW survey of Generation Y consumers in Australia has found that they are prepared to pay as much as $2000 extra for alternative powertrains but are hypersensitive to vehicle running costs.
The Australian section of Deloitte’s latest Global Automotive Consumer Study indicates that dealers will have to stay on their toes if they are to take best advantage of the rising buying power of Generation Y consumers, who were typically born between the early 1980s and the late 1990s.
The study shows that Australian ‘Millennials’, as they are also known, are just as intent on buying cars as previous generations, but that they are more cost-conscious than their parents.
Perhaps contrary to popular perception, Gen Y buyers are also more interested in safety technology than in-car communications tech.
“One of the key things in the study is the proportion of people planning to buy a car over the next five years – that is, 75 per cent,” Deloitte Motor Industry Services lead partner Grant Cameron told GoAuto.
“That’s good. And when you look at the next three years it was 52 per cent intending to buy a car. That’s pleasing to see as well.”
These figures were for consumers overall, but Generation Y consumers were no different.
One of the areas where Generation Y consumers differed from other buyers was in the reasons behind their purchase decision.
While all buyers placed purchase price as their primary motivation when buying a car, Generation Y buyers nominated the cost and availability of parking as their second factor, while all other generations placed fuel efficiency second.
Generation Y buyers named fuel efficiency as their third priority while other generations placed better roads and infrastructure as their third-ranking motivation.
This cost sensitivity produced a worrying outcome in one area: Gen Y buyers are just not as committed to their cars as are baby boomers.
Respondents to the survey were twice as likely to abandon their vehicles if operating costs rose too much.
While they are very sensitive to costs, the survey also showed that Generation Y consumers are interested in new technology, though with an emphasis on drivetrains and advanced safety systems.
“Nearly 50 per cent of them think they will be driving an alternative powertrain in five years,” Mr Cameron said.
“They have a strong preference for hybrid electric vehicles and they are willing to pay for alternative drivetrains, up to $2000 more.”
At the same time, Generation Y buyers are less interested in dashboard technology – the comfort and convenience items that populate the options list – and more interested in technology under the car.
“What they are demanding are safety technologies, not cockpit technologies,” Mr Cameron said.
“Safety technology, like steering them away from a crash or automatic emergency braking, and highly efficient vehicles (are the priority).”
However, Mr Cameron said Generation Y was not clamouring for the really advanced technology that is starting to appear on new cars – at least not yet.
“People talk up driverless cars and Google cars and those sorts of things,” he said.
“They are not high on the agenda for these guys, nor are fully web-connected cars but I think, as things evolve, that that will change over time.”
Mr Cameron said the apparent willingness to pay up to $2000 more for an alternative powertrain appeared to contradict Generation Y’s cost-sensitivity and suggested that preferences were not uniform across the group.
“It seems like there is a communication gap out there and it seems like there is an opportunity for dealers to fill that gap, because they will pay more for the right things,” he said.
Mr Cameron added that the survey results presented several contradictions, which made it difficult for dealers to draw solid conclusions.
“It’s something that is evolving and growing,” he said. “There’s not a clear direction as to how they are going to buy and how they are going to do it.
“It’s evolving. That’s why there are so many little insights in this survey.
“We can’t go and say this is how a dealership is going to sell cars and manufacturers going to make cars because the thing is a moving feast.”
The consumer survey was conducted across 19 countries and some of the megatrends that form a backdrop to the vehicle market provide some food for thought both for dealers and manufacturers.
The survey noted that, in 2006, the world passed the point where more than half the world’s population lived in cities. This proportion was predicted to rise to 70 per cent by 2050.
“Overcrowding, the realities of traffic and new capabilities enabled by technology are all leading to more collaborative approaches to transport,” the survey says.
This hyper-urbanisation would lead to the “sharing economy”, where driverless cars and public transportation play larger roles.
“This trend threatens vehicle sales, particularly in developed economies where profit margins are higher today,” Deloitte says.
The survey also notes that there is an emerging difference between the baby boomers and subsequent generations.
“While baby boomers tend to gravitate towards traditional vehicle ownership models, younger generations are highly interested in models that provide access to mobility, allow them to remain connected and reduce costs,” it says.
“These differing expectations of mobility, along with disruptions of traditional ownership models will change how OEMs (car-makers) engage their customers.”
The Road to Recovery podcast series
29th of July 2014
Market Insight: Gen Y buying habits
Family, friends the main source of info for Gen Y car buyers despite digital age
29th of April 2013
Car dealer profits increase
Finance, insurance key factors behind dealer profitability, not car sales: Deloitte
Click to share
General News articles
Research General News
Motor industry news