Automakers Listening to What Gen Y Wants

DETROIT, Jan. 17, 2009 -- You could call them spoiled. Indulged. Pampered. Cosseted.

Generation Y, that group of young 'uns who are just starting to earn enough money to buy new cars, wants it all. They want vehicles full of gadgets. They don't want to haggle on price. They want cars with personality, great styling and cheap prices.

Heck, they even want to be able to easily change the color of their car a year or two after they bought it.

Call it what you want, but Gen Y — now pre-teens to 27-year-olds — is going to be a powerful force in the auto industry. By 2010, they should account for one in four vehicle sales, according to Deloitte Consulting. So the automakers are listening.

Last week, just before the North American International Auto Show press preview began, Deloitte brought in business students from five colleges around the U.S. to talk about what they think automakers need to do to attract business from their peers. They developed presentations based off their own work as well as a survey of their peers by Deloitte.

"We can either be a great opportunity for the automakers, or a threat to their survival," says Jason Jones, an MBA student from Gonzaga University in Spokane, Wash. "And Gen Y is already here — they need to start building brand loyalty in the Gen Y market now."

One of the most disturbing findings for automakers in Deloitte's survey was that 70% of this age group said they'd never work in the auto industry. It will be harder to get the product and message right if there are few young people designing and marketing cars.

"Automotive employers … have to overcome the very negative perceptions the auto industry has as being a good career choice," says Leah Reynolds, who specializes in generational work practices for Deloitte.

Michigan State student Todd Hagopian says Gen Y can sometimes seem hard to please, because they are ambitious, driven, quirky and infatuated with celebrities.

"People misunderstand what Gen Y wants," he says. "Just because we have three piercings does not mean we want something obnoxious. We just want good design."

And the option to change the color, he added.

Some brands are doing things right, appealing to young people with smart messages and attractive styling. The group rated Mini, Jeep and Scion among their favorites. Some also gave high marks to BMW, Land Rover, Audi and Cadillac.

The automakers are already trying to meet some of the incoming generation's demands. Lewis Booth, executive vice president and chief financial officer at Ford Motor, sat through the presentations and decided Ford is doing some things right. Ford's Sync system, developed with Microsoft, integrates music, phones and entertainment in Ford cars such as the Focus. "I came away thinking we are on the right track," he says.

Chrysler is tweaking its interiors to allow for more customization. A multimedia screen on the dashboard could allow drivers to change the appearance and color of their speedometers and allow them to change the kinds of information presented.

Mostly, though, younger people want what they want — when and how they want it. The student researchers discovered their peers want all the packages of options to be unbundled, meaning they could decide for themselves if they wanted seat warmers and a sun roof, or just the sun roof and a better stereo.

And they hate to haggle.

Kevin McKay, also from Gonzaga, says prices should be straightforward and non-negotiable.

"We don't want to spend time haggling over price," he says.

That doesn't surprise Howard Polirer, director of national accounts for online car marketplace AutoTrader.com. He says many people get aggravated with haggling, even though the industry hesitates to move away from that model.

"I would like to find the first dealer who negotiated off the sticker price and hang him," Polirer says, "because he ruined the industry."