Generation Y Presents New Obstacles for Automakers

The global economic recession has had a disproportionately large impact on “Generation Y” and presents automakers with a range of obstacles to overcome as they compete for the hearts, minds and diminishing financial resources of this vital demographic.

For starters, Gen Y relies on the Internet and social media Web sites to a greater degree than previous generations. Automakers realize that they must establish online identities in order to connect with these potential customers, and most have begun shifting their ad spends away from traditional media, including print, radio and television. Social media sites like Facebook, MySpace and YouTube are the new marketing battlegrounds.

Ford Motor Company has perhaps handled the transition to online marketing better than any other automaker to date.

The company has relied heavily on social media to create awareness of its new Fiesta compact car, and their efforts appear to be paying dividends. Utilizing user-created online videos, Ford generated over 5.9 video views on YouTube and more than 3.9 million Twitter impressions during the first phase of the campaign. The actual impact of the “Fiesta Movement” campaign on sales will not be known until the cars go on sale in the U.S. later this year.

The economic slowdown has also created a preference for used cars among Gen Y, and they are more focused on fuel efficiency and less willing to pay extra for high-tech features. Perhaps due to the increasing availability of open source (i.e. free) software available in the online world, Gen Y are more prone to feel that high tech features like internet access and satellite navigation and audio should be free, standard features in the vehicles they buy and drive.

An unwelcome byproduct of increased connectivity is that Gen Y drivers are more distracted while behind the wheel than their more senior counterparts.

According to the National Highway Traffic Safety Administration, teens between the ages of 16 and 20 account for 12% of all auto crash fatalities in the U.S.

As a result, automakers are faced with developing new technologies to safeguard younger drivers. Ford has taken a proactive approach with new features that allow parents to control certain potentially hazardous activities when their younger drivers get behind the wheel.

Ford has developed MyKey – a thinly-veiled play on the MySpace social networking Website. MyKey allows parents to set maximum speeds, control the front seat belts and monitor the location and fuel economy of vehicles equipped with the technology. Ford has said that it plans to make the technology available across its entire fleet.

Ford’s Sync technology is also aimed at reducing driver distractions by providing features like voice control of integrated and hand-held devices.

According to a recent survey conducted by Deloitte LLP and Michigan State University, 1,100 respondents between the ages of 18 and 30 cited fuel economy as their No. 1 concern when shopping for vehicles.

In a similar survey conducted one year ago, Gen Y respondents ranked safety as their primary concern. According to Deloitte’s vice chairman and U.S. sector leader for the company’s Automotive Practice, Michelle Collins, “comfort” features like audio and navigation systems also ranked lower in importance with respondents of this year’s survey.

The survey also found that over 60% of respondents would consider buying a used vehicle.

Collins said, “We think the economy is really impacting Gen Y and their jobs.”

Despite automakers’ attempts to integrate the latest in high-tech consumer electronics, Collins says that Gen Y appears content to stick to hand-held devices until the economy improves.

Collins said, “Gen Y are demanding, but smart and practical-minded consumers.” She went on to say, “Some in the group we talked to said they don’t want to pay more for GPS or for connectivity because they already have all the functionality, so why pay more?”

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