Gen Y Becoming Tastemakers for Auto Industry
Sep 03, 2014
Business 101 says that if you want consumers to purchase your product, you have to make a product worth purchasing. No one is going to spend their hard-earned money on a product they don’t need or doesn't work right. This simple concept has kept things like bottled water for pets, the egg cuber and Plastic Ovens off the market. If it doesn't suit the needs of the consumer, they won’t buy it...plain and simple.
So any business that wants to succeed needs to figure out their target demographic and what those customers wants and needs are. So it’s no surprise that car companies have been doing this for years. What is shocking though is that the generation dubbed, “the me generation” or more formally, Generation X, is no longer the tastemakers when it comes to demand.
Recent studies show that Generation Y are starting to surpass Generation X in car purchases. J.D. Power and associates show that Generation X (born 1965 – 1976) accounted for 24 percent of vehicle sales in 2013 while Generation Y (born 1977 – 1994) accounted for 26 percent of vehicle sales, the first time ever that Generation Y has out purchased Generation X.
While the exact dates of each generation can be debated at length, it still doesn't negate the fact that young adults are driving car sales and are expected to continue doing so in 2014 and beyond. Generation Y sales volume is on pace to grow 17 percent compared with 2013 while Generation X is only projected to increase by 6 percent in 2014, effectively widening the margin and taste-making power Generation Y now possesses.
So what does all this mean for the future of vehicles? A couple things actually! For one, young adults are flocking to urban living and with that comes less space. Generation Y’s demand for smaller compact cars are up while large SUV’s and truck sales are down among this age bracket. Generation Y is also more concerned with the environment than their predecessors making high-mileage and electric vehicles a desirable product. Finally, young adults are also more tech-savvy and demand the latest and greatest in vehicle entertainment systems. Gone are the days of a simple radio dial and cassette deck and in their place are touch-screens, built in GPS and voice command systems.
So while the long-term future of vehicles is unclear, one can hypothesize that they will be smaller, more efficient and all interconnected through emerging technology. Will SUV’s and trucks disappear completely? Probably not, but they may become less expensive as the supply and demand landscape shifts thanks to Generation Y.
