Headlights shine on younger buyers

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The nation's shifting demographics will create a sea change for auto marketers in the next decade.

Generation Y, the 71 million children of baby boomers now between the ages of 8 to 25, is the most multicultural, diverse generation ever. And they'll be buying more new cars and trucks in the near future.

Gen Y buyers under 23 years old bought roughly 400,000 new vehicles in 2001, estimates Jim Lentz, VP of Toyota Motor Sales USA's Scion, the youth-targeted Toyota Division unit. By 2010, the group will account for 4 million new-vehicle sales and 6.5 million units in 2020. Toyota will launch two Scion models next June. For eight months, Scions will be sold only in trendsetting California.

Pierre Gagnon, president-chief operating officer of Mitsubishi Motor Sales of America, figures his brand is sitting pretty. Mitsubishi surpassed Volkswagen of America for the industry's youngest buyers, he says, citing this year's buyer demographic study by consultancy Strategic Vision. The study revealed 41.6% of Mitsubishi buyers are under 35. "As a percentage of sales, we sell more to Gen X and Gen Y than anyone else in the industry," Mr. Gagnon says. "We are considered a cool car company."

music hits right key

Industry insiders who questioned Mitsubishi's extensive use of hip music as its ad theme in executions from Interpublic Group of Cos.' Deutsch, Los Angeles, may have to reconsider.

While using trendy youth music in car advertising can break through the clutter, it will become "just noise" if too many other car companies adopt the approach, says Gary Berman, CEO of March Segment Research, in which WPP Group holds a 49% stake.

The "silver bullet" in Census 2000, says Tim Swies, exec VP of Hispanic specialist Zubi Advertising, Coral Gables, Fla., is that nearly half the growing Hispanic population is under 18 years old. The group presents "a lifetime of prospects because Hispanics are younger" than any other diverse group, he says.

In general, Mr. Swies says, all minorities, including blacks, whose growth is expected to remain flat through 2007 at 12% of the population, spend more on options for premium vehicles than non-Hispanic whites.

Automakers will spend less on general-market advertising, predicts Mr. Swies, who is account chief on Zubi's Ford Motor Co. Ford Division business. "If you say to yourself as a marketer, `The complexion of my customer is changing, not necessarily skin color but demographic segments, then why am I still allocating my advertising resources the same as 20 years ago?' "

While most major automakers have been advertising for years to multicultural groups, spending will increase in the next 12 to 18 months, Mr. Berman predicts. Also rising are local programs since the ethnic groups are geographically concentrated.

Mr. Berman believes three types of models will be most popular in five years for multicultural buyers: roomy family vehicles (including sport-utilities and minivans), since the buyers tend to have larger families; entry-level models "with a price-cool ratio," which he defines as an affordable yet hip vehicle for younger buyers; and upper-end SUVs.

He describes future vehicles as "seamless transportation" in which consumers will feel like they're in their homes. He predicts an increase in gizmos, like the DVD movie players that auto marketers already offer. Mr. Berman expects "customized options" that with a swipe of a magnetic card would bring a female owner's lighted visor mirror down or heat a cup holder to the desired temperature for commuter coffee. Exterior paint colors will be brighter, a trend that started in recent years with yellow and lime green.

Mr. Berman expects automakers to develop financing plans to woo less-affluent multicultural consumers and train dealers how to reach out to new diverse buyers, including women. "This isn't mass marketing anymore."

crossover gains

Versatile crossover vehicles, which combine cars and trucks, will likely take share from minivans in the future, says Peter Dixon, general partner of brand strategists Lippincott & Margulies. "Consumers want choice, and they're not satisfied with a standard truck or car."

The upcoming young car buyers also will redefine luxury brand popularity.

Bob Lutz, the outspoken and charismatic chairman of North American operations for General Motors Corp., told Advertising Age the children of today's luxury car buyers "grew up in the back seat of a Mercedes-Benz, BMW and Audi." He says "they are not going to want their parents' vehicles, just like their parents didn't want their parents' vehicles. Five to 10 years from now, BMW and Mercedes-Benz will be brands of the past."