Deloitte Survey Sheds Light on Preferences of Younger Buyers
DETROIT — According to a recent Deloitte survey, individuals who are age 18 to 30 and make up what's known as Generation Y will likely be creating plenty of business for used-vehicle dealers.
The survey determined that approximately 63 percent of respondents believe used vehicles are a greater value than new units. Furthermore, they're more than three times as likely to purchase used vehicles instead of a new one.
Michelle Collins, vice chairman and U.S. automotive sector leader for Deloitte, explained that the recent economic recession greatly affected the mindset of Generation Y, the group that constitutes people who were born between 1979 and 1991, which now totals about 75 million.
"Generation Y is typically a group that thinks ‘newer is better,' but as the economy is slow to recover and jobs are hard to find, this generation may help reshape the car buying process," Collins pointed out.
Deloitte revealed other survey findings about this generation that could also mean gains for certain dealers, starting with loyalty displayed in this demographic.
Company officials noted that the label "Made in the USA" still carries significant weight. The survey discovered that more than 50 percent of Gen Y think it's important that the vehicle be manufactured in an American factory regardless of the brand.
And when they make their vehicle selection, a high percentage of respondents apparently intend to stay with their automaker choice for quite a while. In fact, 42 percent of those polled indicated they expect to be driving the same vehicle brand in five years.
As compared to when Deloitte conducted this survey a year ago, that figure is up a little more than 15 percent. Previously, only 27 percent of those questioned said that they expected to be driving the same brand in five years.
A nameplate's current financial status also is weighing on the minds of individuals in this demographic. Deloitte pointed out that respondents were fully aware of the federal bailouts and bankruptcies that dominated headlines last year, especially in connection with the auto industry.
As a result, 44 percent of those questioned said they would prefer to purchase a vehicle from a nameplate that did not accept federal bailout funds. Similarly, only 36 percent indicated they would consider buying a vehicle from a company that is or has recently been in bankruptcy.
One specific segment of vehicle class with this population bracket also appears to be gaining positive steam. The survey mentioned that SUVs are making a bit of a comeback, as long as the economy continues to recover and gas prices do not return to the levels seen in 2008.
In fact, Deloitte found that almost one in four respondents (23 percent) see themselves driving an SUV in five years; that's a rise from just 11 percent last year.
While a trend toward SUVs might be on an upward track, the survey also reported that this generation tends to have the stance that "green is here to stay and they are willing to pay more for it."
All told, 64 percent of those polled conceded that they're willing to pay more for a vehicle that was either environmentally friendly or one that saves money on energy costs. An even higher percentage — 73 percent — declared the environment was an extremely important factor when purchasing a vehicle.
Meanwhile, a slightly smaller figure, 49 percent, in fact, also contend that the type of vehicle they drive "makes a concrete difference in addressing global and local concerns about the environment."
The survey titled, "Gen Y: Making the Short List," also revealed online sites that might be indispensable to individuals age 30 and younger aren't always the first avenue they use when considering a vehicle purchase.
"Social media sites and blogs may be one of the most popular ways for Gen Y to communicate, but they may not help sway purchasing decisions when it comes to automobiles," Deloitte officials noted.
To back up their assertion, they pointed out that almost 60 percent of respondents said they do not look for advice or information on blogs or social media forums before purchasing a vehicle.
However, that doesn't mean that this age group is not using the Internet heavily to review and to research vehicles. These individuals might even prefer the Web than to being on a dealer's lot.
"When it comes to physically going into a dealership, Gen Y respondents are largely unsatisfied with the overall dealership experience," Deloitte found.
"No-haggle is their preferred method of doing business," the company added.
By most accounts, the survey revealed that these individuals turn to online search engines to find vehicles, and they trust the information shared on automakers' sites. However, 85 percent of respondents prefer to know the final selling price upfront, and more than 60 percent said they would rather skip pricing negotiations altogether with a salesperson.
"They are anxious when a dealership salesperson approaches them and prefer to have the sales processes occur over the Internet without any face-to-face interaction," Deloitte indicated.
The company produced this survey in cooperation with the marketing department at The Eli Broad Graduate School of Management at Michigan State University. They explained that the process included 1,100 participants and respondents were randomly drawn from a panel of individuals who agreed to participate in online surveys. The random sample was evenly dispersed across geographic regions.
"We worked closely with many Gen Y students over the course of this survey and have gained some valuable insights that we hope the automotive industry will hear," Collins stressed.
"This consumer group accounts for 25 percent of the marketplace, so it's certainly important that we do all we can to make sure we take their preferences into account," she added.