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Automakers are struggling to capture this particular age group as sales drop

Automakers are starting to see a shift in the priorities of potential young car buyers today. Gone are the days of late teens and twenty-somethings rushing to buy their first car for a taste of freedom. Instead, this age group, or Generation Y, would prefer the latest smartphone or tablet. 
 
"A vehicle is really a discretionary purchase and a secondary need versus an iPhone, mobile phone or personal computer," said Joe Vitale, an automotive consultant with Deloitte. 
 
The car is no longer a teenager or 20-year-old's only chance at freedom. This generation can now connect via smartphone, tablet or laptop no matter where they are. 


Generation Y seems to be more into fancy gadgets than monthly car payments [Image Source: softwarewithstyle.com]
 
The other issue here is that members of this age group don’t typically have fat wallets. A cash-strapped twenty-something will choose the latest gadget to keep connected with friends and family rather than buy a car, pay to keep it maintained, purchase car insurance, etc. This is obviously much easier for those that live in large cities with reliable public transportation.
 
But having the latest device over a car isn't always a frivolous choice. Many companies today keep employees connected through email, a company website or other networks. Having a mobile device almost essential for the employed or even job seekers that need to have a way for potential employers to contact them at any time.  
 
So what does this mean for the auto industry? It means that automakers have to find new ways to capture this audience. The number of U.S. auto buyers ages 18-34 dropped to 11 percent in April 2012, compared to 17 percent in April 2007, which was before the recession. A total of 14 million U.S. auto buyers ages 18-34 are expected to make a vehicle purchase in 2012, which is the best year yet since 2007, but is still a drop from the annual average of 16.8 million from 2000-2007. 


Scion xB
 
Companies like Ford and Toyota have built inexpensive, subcompact cars like the Ford Fiesta and Scion xB/xD for the frugal youngsters that make up Generation Y. Automakers have also tried to lure this age group by adding increased technology for music and social networking in their vehicles, although the U.S. Department of Transportation has been trying to eliminate unnecessary technology in vehicles to reduce distracted driving. Automakers, however, have been rebelling and adding new tech anyway in order to give the public what it wants and increase sales. 
 
But the issue remains that if this generation just doesn't have the cash or the need for a car, automakers may have to find other ways to sell to this age group. 

Source: The Detroit News



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By Master Kenobi (blog) on 8/13/2012 8:27:52 PM , Rating: 5
Some of this I can agree with, and some of it I need to wave the bullshit flag on.

quote:
The cause is extremely high student loan debt, poor post-graduation job prospects, poor pay at most entry level positions, and just a general shift in opinion from cars being "must haves" to "nice to haves."

I'll agree to this in principle, but I will point out that poor post-graduation job prospects is worsened by people drinking the kool-aid. I know growing up (I was an '86 kid) that there has been a steady shift in life goals. Where as the previous generation grew up being lectured to get a decent job, even if you don't exactly like it, we didn't. You work to make ends meet and support a family, if that means you end up in a career field you aren't exactly happy with, but it pays well, so be it. Instead my generation Gen Y seems to have been fed a line of bullshit from the get go. They teach you to follow your dreams, wherever they take you. That's fine and dandy but the graduation statistics every year show that the USA graduates a high percentage of lawyers, and liberal arts majors. The former can find jobs because lawyers come in different flavors, such as Tax, Criminal, etc... Liberal arts majors? More or less useless if you don't want to be a teacher. That high priced college degree in liberal arts? Not worth the investment unless you get lucky. Psychology and Business majors are the current flavor of the month and both of them are dime a dozen, yet neither field does anything tangible save for a few outliers.

The job prospects? Pretty damn good if you went to school with the intention of landing a decent paying job with career growth in mind. The hard sciences are always popular and cover everything from Biology to Software Engineering. Your science and math majors are finding jobs that average 50k straight out of college, growth depends on their ability to keep learning and improving. IT is one of the more difficult fields due to the pace of changing technology, you are constantly in a vicious cycle of mastering what you just learned and learning what comes next. Chemistry/Biology that tie in Pharmaceuticals is also a HUGE job market that pays well, but again the work isn't easy and there is a lot of pressure to produce the next miracle drug that will rake in billions.

As for the whole car thing, part of this is poor parenting rather than economics. These kids are comfortable with the fact that their parents will accomodate them even if they are 17, 18, 19, 20+ by transporting them as needed to where they need to be. If more parents cracked the whip and said get a job, buy a scooter or something cheap and get to work on your own then you would see the traditional priorities assert themselves once more. As it is, these kids are not being forced to fend for themselves and as such are just getting lazy. Frankly I weep for my generation, but at the same time I have no competition in my job field from Americans. My stiffest competition are those from Pakistan, India, Korea and Japan where their cultures still push for working hard to get ahead, they also encourage learning practical skills that can land them jobs. The current Gen Y crowd has lost the drive to work hard and get ahead.

If you are a Gen Y kid, take a look around, the few of you that know what working hard is can attest to the simple truth that most of your peers growing up are losers. Yes, I used the term and I'll use it again. Losers. These losers and some of their parents are the reason things like the "Honor Roll" are being taken out of schools. We're in a time where we believe that putting forth your best effort is all that is required and you get an "A for effort". There's a quote for that.

"Failure - For when your best isn't good enough".


By stm1185 on 8/13/2012 9:14:25 PM , Rating: 3
50% of Gen Y who actually bothered to go to college can't get anything with their degree. Cars are not a priority in this clusterfuck period.


By Flunk on 8/13/2012 10:47:41 PM , Rating: 1
Part of the problem is that the world only needs so many History and English majors. It's hard to hire entry-level positions that need Computer Science or Engineering degrees. People have been told "follow your dream" for too long without considering the practical situation.

I will tell you, as a member of this demographic I bought a (small fuel efficient) car as soon as I could afford to after college. I couldn't afford a car in highschool, who can? Mostly Mommy and Daddy pay.


By Dr of crap on 8/14/2012 8:30:18 AM , Rating: 2
And that's what I was going to say.
When I was in high school, I could buy a car and pay for insurance from what I made at my job while in high school.

What kid can do that now??

Insurance is through the roof and car prices aren't very good either.

And I suspect these "polls" are taken in New York, and maybe Chicago. Here our public trans sucks and to get around you need a car, so they NEED to do another govt funded study!


By mcnabney on 8/14/2012 8:59:47 AM , Rating: 3
But this survey is about new cars - not just having a car. A more accurate statement about Gen-Y would be that they don't equate having an expensive new car with the same status as previous generations. Instead, they think carrying a Macbook Pro and current generation iPhone/iPad implies the same degree of conspicuous consumption that flashy cars did in the past. They are certainly cheaper status items than cars.


By bah12 on 8/14/2012 9:43:13 AM , Rating: 3
I think that is the root cause here. Cars just aren't a status symbol anymore. I have several nieces/nephews in high school, and they just don't care what they drive.

Gen X (myself) spent their Friday nights on the "drag", he with the coolest ride was king. As the article alludes to, this was our primary way of connecting with other youth outside of school. The internet barely existed, and the only other options was to pick up the 1 phone in the house if Dad/Mom wasn't on it. Today every kid has their own personal device on them 100% of the time to connect them to literally anyone in the world. A car really is just a secondary item to them, it is no longer required for social standing.


By RufusM on 8/14/2012 9:04:11 AM , Rating: 3
I disagree completely. A person can buy a drivable car for about $2,000 today. When I was in high school in 1988 my first car cost $1,000 and I was making $3.75/hr. which is about the equivalent to today's costs and wages.

I couldn't afford the insurance so my parents payed 50% of it as long as I maintained a B average to get the discount.

It's perfectly doable for someone in high school to buy a car. It certainly won't be a new car, but it will be drivable. The student would also need to learn how to repair and maintain it too like I did.


By Rukkian on 8/14/2012 9:41:58 AM , Rating: 2
While I was in the same boat, cars today are not that easy to work on, and with some you need very expensive tools to fix things. It is not like when I was a kid, and the cars we had (which were 15 years old), you could climb inside the engine compartment next to the block (maybe just taking out the headers) with a set of sockets and take almost everything apart in a few hours.


By JediJeb on 8/14/2012 6:48:25 PM , Rating: 2
I graduated high school in 1985 and at the time it is true $1000 would buy you a fairly nice vehicle. My grandfather even bought a new Dodge D50 mini pickup for I believe $7000. Today even a $2000 car is not that great. You can certainly get around in it, but if you even try to do some tweaking it will easily end up doubling the cost, just nice wheels and tires can do that now days.

The sad thing is, I remember back in 1973 my father was making $8000 per year as a mechanic and he went out and bought a Plymouth Fury III, big 4 door hardtop just a step down from a Cadillac at the time and paid a whopping $3000 for it. That is someone making just over minimum wage buying a top end mid range vehicle for less than half their yearly wages. That would be something like a $40,000-$60,000 vehicle today, and people making just over minimum wage do not make over $100,000 per year! That wage to price ratio would have someone making around $18,000 per year being able to buy at least a Toyota Camry for around $10,000 brand new. Lack of purchasing power for young people is exactly why they are not buying new cars these days, no so much that they don't want them. Make a dollar worth something like it was 30-40 years ago and you will see people actually buying things again.


By Natch on 8/14/2012 9:56:50 AM , Rating: 3
That's the liberal arts push that colleges have gotten away with, for too long, IMHO. What kid wants to hear that, in order to get an engineering/science/doctor's degree, they'll have to work for it? To heck with that, take our underwater basket weaving course of study, and you'll breeze your way through our $20K/year tuition school!!

Of course, they find out afterwards the difficult lesson that you reap what you sow. While this recession has had it's share of engineers that were laid off, I'd be willing to bet that they find good paying positions faster than the hoards of liberal arts degree holders that were laid off.


By teldar on 8/14/2012 10:50:39 AM , Rating: 2
You are a poor, sadly mistaken fool of you think your college career what you take. The colleges i went to had multiple schools available and offered many fine courses.
The engineering school basically had its own campus with a nuclear reactor, two aerospace engineering buildings, a naval architecture program... They also win the yearly solar race. Like the last 7 years in a row. You may get the idea. They spend a lot of money on engineering. I think they would be unhappy if nobody went there. They also have a top 5 medical school. And a top 3-5 business school.
I don't think they are forcing people to English and history degrees.


By Odysseus145 on 8/14/2012 1:07:37 PM , Rating: 2
If you want to blame someone, blame the high schools for de-emphasizing science and critical thought for so long. Colleges don't force majors on anyone.


By wordsworm on 8/13/2012 10:29:50 PM , Rating: 3
Kool Aid is not the big problem. It's the guns and alcohol.

Liberal arts undergrads are generally the folks who take up jobs which require advanced reading and writing ability. There are a lot of jobs that require those abilities in everything from the folks who run public services, to education, and to a variety of business roles. There are more jobs requiring a BA than there are BS or BE.

If you go to Korea, where engineering graduate degrees are a common goal, you'll find a lot of engineers working 12h/day, 6 days per week, for roughly the same amount of money based on hours as I did teaching ESL for 20h/week, 5 days per week.

Of course, education in Korea is a lot different than it is here. Middle-class Parents put their kids in public schools six days per week until about 1pm. Then, they send them to private schools. The end of their day can be anywhere between 8-10pm, depending on how hard the parents push. If parents did that in the US, they'd be labelled as abusers and their children would be taken away. I have heard that Chinese and Japanese parents have a similar approach to education.

Another side-note that's kind of cool about Korea is that if you buy a 50cc or less motorcycle, you don't need insurance. There would be a lot more people on the road if that sort of thing were allowed in Canada/US.


By TerranMagistrate on 8/14/2012 12:44:43 AM , Rating: 2
Even in the field of engineering, job prospects are only great for the very top students and/or if you have plenty of relevant and useful experience.

For the rest of us, keep praying because companies simply aren't willing to invest in training like they did in the good old days.


By Master Kenobi (blog) on 8/14/2012 6:46:08 AM , Rating: 3
quote:
Even in the field of engineering, job prospects are only great for the very top students and/or if you have plenty of relevant and useful experience.

Experience wins every time, that has not changed since the dawn of time.

quote:
For the rest of us, keep praying because companies simply aren't willing to invest in training like they did in the good old days.

I take issue with this piece. The majority of my co-workers are in the 40-50 range and have been since I started white collar work. They all have this same mindset that when they need to learn something new that the company will teach them, or send them to a class, or buy some books. I find that whole idea laughable and always have. If the company has to poke, prod, and hand you a carrot to get you to keep your skills relevant to the ever changing landscape then you are always a day late and a dollar short. It's past time for people to take some personal responsibility for themselves and their skillset. If things are changing (and they always are), the onus is on you and you alone to improve your marketability. The days of companies investing in their employees is rapidly drawing to a close and aren't coming back. It's up to the employees themselves to grow on their own. This brings me to my next point.

The old mentality of working for the same company for 10, 20, 30+ years is gone. These days you will do 2-4 in a specific job/company and then switch because you will stagnate if you stay longer. Granted if you work in contracting or projects, simply switching to a new contract/project can provide the same benefit. Companies know this and they see it regularly. It's the reason almost every company's HR department is crying about low retention rates. People with any shred of ambition take their career into their own hands and improve themselves and their marketability. They use these improvements to land their next job, which typically comes with a nice pay raise. I highly suggest anyone new to the job market keep this reality in mind.


By 1prophet on 8/14/2012 7:34:18 AM , Rating: 2
And that King of the Mountain mentality creates individuals who may be smart and talented but in the end are vain, selfish, greedy and look down at those not like themselves.

The corporations not wanting to invest in their employees are hurting themselves in the long run,

by creating a culture where employees who will not invest in them and just like a self serving whore will jump to the next John with a larger wallet.

It may be appear good for the individual in the short term, but in the end is detrimental to business, society and the country as a whole.


By WalksTheWalk on 8/14/2012 8:10:51 AM , Rating: 2
Many companies invest in a certain amount of employee training, but they expect the employee to do their part on their own as well.

It's a two way street. We have some people at my office that rest on their laurels and have been passed up by other employees in skill and compensation. They don't want to do work outside of their comfort zone and learn about new things. Any training they receive goes to waste because they don't WANT to take on anything new. As soon as the thing they work on goes away, and it will, they will be out of a job.

The fact is, if you keep your skill set current and do good work, you'll find employment somewhere.


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