Young would-be buyers are losing interest in cars. To rekindle the fire, Toyota is unveiling a sporty new sports car that doesn't cost a fortune.
By Doron Levin, contributor
FORTUNE — Young buyers — “millennials” in the parlance of marketers — present an enigma for auto executives. For decades, they have taken for granted that young people will lust after cool new cars — even if they can’t yet afford them. Now, that appears to be changing.
Today’s young, from Tokyo to Chicago and Berlin, are much slower than Gen X or Gen Y to grow up, move out of the house, find a job and, therefore, need to buy a car. They express individuality by dint of their phones, video games, tattoos and clothing. According to Scratch, the consulting unit of Viacom, millennials in the U.S. — those born 1981 or later — are six times less likely to have a driver’s license than previous generations.
Is the lack of enthusiasm for owning and driving a car a sign of indifference, hostility – or perhaps boredom with new models? Akio Toyoda, president of Toyota Motor TM , suggests it’s the latter. He has told engineers and designers if the young aren’t buying his company’s cars “it’s our fault.”
Toyota’s GT86 sports car, sold in the U.S. as the Scion FR-S, was designed expressly to excite the interest, if not the passion, of the young. Low to the ground, basic, with few frills other than those meant to enable iPod use during driving, the FR-S seeks to excite with race-car handling and steering, though with only a two-liter engine that generates 200 horsepower.
The FR-S’s base price is about $24,000. And it’s fuel efficiency is relatively attractive; a test drive showed it to be 32 miles per gallon around town and on the Interstate. (Forty years ago Datsun — now Nissan NSANY — introduced the 240Z, a wildly popular no-frills sports car.)
Young consumers “wants a car that looks more expensive than it is, they want to be validated,” said Annalisa Bluhm, a spokesperson for General Motors Co.’s GM Chevrolet division. “Most of these customers can’t afford more than $20,000, so we have to figure out what will be better for them than a used car.”
But many young drivers are used to their parents’ cars, many of which were big, fast and had lots of creature comforts like heated seats and sunroofs. They’re surely not wild about having to drive econoboxes.
According to Bluhm, the compact Chevrolet Cruze and smaller Chevrolet Sonic are proving popular with younger buyers, who generally are choosing models like Honda HMC Civic, Toyota Corolla and Ford F Focus — when they can new. Often they’re ending up with Toyota Camrys, which they inherit from parents or an older sibling.
David Sargent, vice president of global automotive, for J.D. Power & Associates said “there is some truth in what Toyoda says,” but young buyers also have been driven out of the market due to lack of credit. “We see people coming back a bit now,” he said.
A study by the Pew Research Center, released in February 2010, says only one in five millennials are married by the age of 28, compared with 40 pc of the “baby boom” generation at the same age. But the Scratch study said that 32 million in today’s young cohort are still interested in cars and see them as an important part of growing up.
Inevitably the young do find jobs, have children and discover lots of practical reasons to get a license and own a car. In short, they grow up – just like us. The automakers, by getting to know them now, may have more insight a few years hence about what sorts of vehicles they’ll buy.