Young U.S. consumers want vehicles outfitted with expensive technology that boosts gas mileage and keeps them safe and connected, according to a survey published on Thursday. But the high cost of car ownership remains a stumbling block.
These consumers, ages 19 to 36 and known as Generation Y, are also three times more likely than their parents to abandon car ownership if costs escalate, consulting firm Deloitte LLP said in the study.
The findings suggested that worries that the millennials, as members of Gen Y are also known, are eschewing vehicles altogether may be overblown. But winning them over means striking a balance between making cars affordable as well as technologically advanced.
"Affordability is the mantra for Gen Y consumers who don't already own or lease a vehicle," Craig Giffi, head of Deloitte's U.S. automotive practice, said in a statement.
Millennials account for some 80 million people in the United States, rivaling the baby boomer generation. Their sheer size makes them something of the next big emerging market for automakers like General Motors Co (Deloitte, MI, USA) and Ford Motor Co (Dearborn, MI, USA).
Many delayed buying cars during the economic downturn and are open to options like renting cars from Zipcar (London, UK). Their experience with smartphones has shaped their expectations for car ownership.
"When they do buy cars, millennials' expectations of car ownership could parallel their expectations of technology - where upgrading every two years is the norm," Ford Chief Operating Officer Mark Fields said during a keynote speech at the Automotive News conference this week.
More than 2,000 of the survey's respondents were U.S. consumers, of which 677 were part of Generation Y. Of the younger group, 86 percent owned or leased a vehicle.
Deloitte defines those in Generation Y as people born between 1977 and 1994.
'GET THEM YOUNG'
More than half of younger consumers said they expect to drive a vehicle with an alternative engine, such as a hybrid electric, according to the Deloitte survey, which was conducted in 2013.
Almost three-quarters want technology that recognizes the presence of other cars on the road. More than half want technology that entertains them while driving and the ability to use applications on their smartphones from the dashboard.
Analysts said trends toward developing both more fuel-efficient and connected cars were evident at the Detroit auto show this week. One example is Honda Motor Co's (Tokyo, Japan) 2015 Fit, a "green" subcompact that includes a standard rear-view camera.
Sergio Marchionne, chief executive officer of both Fiat (Turin, Italy) and Chrysler Group LLC (Auburn Hills, MI, USA), said the company is planning to showcase a small sport utility vehicle at the upcoming Geneva Motor Show.
"It's getting in young buyers who don't have a lot of money," Marchionne said. "So we need to expand the class. We need to get them young so when they get older, they can buy more expensive Jeeps."
Ford CEO Alan Mulally also told reporters it will be critical for the industry to wrestle with the question of affordability as more and more safety, navigation and entertainment options are offered in the cars.
The results are part of a broader Deloitte report to be published later this year on global mobility, based on responses from more than 23,000 consumers in 19 countries.
(Reporting by Deepa Seetharaman; Additional reporting by Bernie Woodall and Paul Lienert; Editing by Jan Paschal)