Youthful drivers get auto breaks

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Automakers covet buyers between 16 and 25 years old because of the potential to sell them more cars and trucks as they age. The industry tries to gain their awareness and acceptance by sponsoring concert tours and other youth-centric events. But entertainment is not the biggest concern for these fledgling motorists.

Auto consultant Dan Gorrell says "the biggest issue for [vehicle] buyers under 25 is affordability." Most people under 25 are driving used, not new, vehicles, says Mr. Gorrell, VP at Strategic Vision. He notes consumers in this group tend to buy used and entry-level new vehicles, often registered in their parents' names for insurance purposes.

Carmakers are adjusting to this reality.

Chrysler Group targets this age group for its certified, pre-owned models, which, similar to new cars, are backed by warranties. Although most of the marketing is done at the dealer level, the automaker promoted its pre-owned program as part of Chrysler's broader 20-plus college campus tour.

The marketer promoted the benefits of its certified used vehicles under the theme "Get used," says Keith Helfrich, director of Chrysler's pre-owned unit. The used vehicles displayed weren't just the bare-boned basics, but had cool accessories that appeal to the target. Chrysler's captive financing arm was also on hand offering special loans.

Mr. Helfrich says the automaker, which started its certified program just three years ago, is seeing impressive results with young buyers. For all the certified, pre-owned Jeeps sold, 8% of buyers are under 25, and for Dodge, it's 6%. Roughly 2.5% of Chryslers are sold to under-25s, most of which buy PT Cruisers, he says.

College graduates are the target of special new-vehicle deals offered by most carmakers via their captive finance companies. General Motors Corp.'s GMAC financing arm offers separate loan programs on new models targeting college grads and military personnel. Its SmartBeginnings plan is for anyone between 18 and 25.

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"We realize they have limited income, so they get treated in a unique way," says David Jones, VP-plans at GMAC. "We're trying to identify a segment of the buying population that's getting into the market, and create a loyalty to GM and GMAC."

The 10-year-old programs are promoted via military and other specialized publications, and with brochures distributed at campus job fairs and dealerships.

Chrysler is also trying to reach the 25-and-under set in the military by taking its "Jeep 101" tour to eight bases and five general venues through November. Only participants at the military bases will be able to win a 2005 Jeep Wrangler Unlimited.

Lexus Financial Services, the lending arm of Toyota Motor Sales USA's luxury brand, for the first time added a cash rebate, $750, June 1 to its existing college-grad program on new Lexus models purchased or leased through March 2005. Like competitors' plans, Lexus requires applicants to provide proof of present or upcoming employment, insurability, as well as other requirements. Lexus bought banner ads on third-party auto Web sites. Publicis Groupe's Team One, El Segundo, Calif., handles.


Volkswagen of America sibling Volkswagen Credit first targeted college graduates in 1997. VW now offers special lease or purchase deals on both new and used cars, distributing brochures on campuses at its "Major Motion Picture Show" events.

The most popular new-car model, purchased during October and November 2003 and driven primarily by consumers under 25 years old, was the Honda Civic, according to Strategic Vision. The consultancy polled nearly 51,000 new-vehicle buyers three months after purchase, asking that the main driver answer the survey. Of those new buyers surveyed, 8.4% drove the Civic. Rounding out the top five were GM's Chevrolet Cavalier (6.3%), Toyota Corolla (3.7%), Ford Focus (3.7%) and Volkswagen Jetta (2.9%).

Mr. Gorrell says 37% of those under 25 who drive a new vehicle drive a small car.

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