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Generation Y talking, is auto industry listening?

November 23, 2010

The generation of Americans born between 1977 and 1994, alternately called Generation Y, the Millennials or Echo Boomers, represents 28 percent of the U.S. population and is having a significant impact on the country's newvehicle sales.

Gen Y consumers are less interested in larger vehicles and more interested in lower transaction prices and manual transmissions than consumers from other generations, according to a new J.D. Power and Associates study. However, Gen Y consumers are less interested than older generations in environmentally friendly vehicles, even though they are more interested in fuel economy and operating costs.

The "2002 Generation Y Automotive Consumer Study" analyzes a segment of consumers who are purchasing their first new vehicle. This year, almost 10 percent of households headed by Gen Y consumers will buy a new vehicle, accounting for roughly 700,000 purchases."Our research indicates that Gen Y consumers are style-conscious, less loyal to domestic brands, and seek vehicles with 'fun-to-drive' characteristics," said J.D. Power's Walter McManus.

"Gen Y consumers want vehicles that stand out and reflect their individuality." The study predicts that Gen Y households will outnumber Gen X h o u s e h o l d s within 10 years. Today, Gen Y members are the head of 6 percent of all U.S. households. That number is expected to increase to 22 percent by 2010, while households headed by Gen X will remain at 17 percent of the total over the same period. "The impressions made on these new households by their first vehicles will stick with them for a lifetime," McManus said.

"Automakers have already begun to factor Gen Y consumers into their strategic planning. "Toyota and the Scion brand and Honda with the Element are two examples of automakers designing their products for the youngest generation of American vehicle buyers."