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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 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.


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