In study after study, the so-called millennial generation says the high cost of fuel and insurance are discouraging them from buying cars. But auto makers haven't fully gotten the message, according to one pollster.
"Speaking in general terms, auto makers aren't demonstrating that they understand the needs and wants of the generation and don't seem to be spending their dollars where millennials are," says Rob Henderson, president and CEO of Yconic, which recently released its own study of that generation's auto-buying habits.
Henderson notes a large portion of auto makers' marketing dollars still goes to traditional media – a place millennials are relatively inactive. When they do use social and digital channels, "the messaging is usually not relevant or is promoting an incentive that millennials can't resonate with."
Yconic's survey of 1,299 millennials revealed owning a car is considered a rite of passage, but one that has slipped down the list of youthful milestones because of the cost of insurance and gasoline. Fuel concerns were cited by 70 per cent and insurance was noted by 68 per cent of respondents. Monthly car payments were third, at 52 per cent.
"This audience still cares about buying automobiles – and that's not what we thought; we were taken aback by that," says Henderson. "They really are still interested in the rite of passage of purchasing a car and driving."
Alyssa Charles and Jaime Morrison illustrate Henderson's point. They want their own wheels, but will wait until the time is right to be wooed by price cuts and incentives.
Michael Hatch, chief economist with the Canadian Automotive Dealers Association, defends manufacturers. He points to dealers offering $500 fuel cards or 99-cent gas price guarantees for a period of time.
But he says auto makers are virtually powerless when it comes to insurance premiums.
Nor is there an organization lobbying the government or insurance companies to reduce youth rates. (Some alumni associations do offer preferential group insurance rates, dependent on driving record.)
"It's impossible to fully address that issue as compared to fuel concerns," says Hatch, citing the fact under-25s are statistically high-risk drivers.
Nor can auto makers address the price of fuel, he says, although great strides have been made to improve fuel economy, thanks to government regulations. And Nissan sells the Micra, which is thrifty and costs less than $10,000.
A review of manufacturers' websites reveals some offers for students and graduates, including $500 to $1,000 rebates, which are often tacked on to other offers. Those types of promotions can save a buyer thousands of dollars if they're willing to compromise on the type of car they want.
Hatch notes these twentysomethings are not much different from previous generations; historically that age group has never been the big driver of car sales. That's even truer now with the high cost of tuition, underemployment and the desire to spend money on the latest technology.
But buying habits change as they age and grow disposable income.
That's something Charles doesn't have right now. A marketing student, she says incentives would help.
She's the same as 22 per cent in the study who use their parents' cars. While her parents pay for the insurance, she ponies up for gas and parking. Even then, "The gas will definitely burn a hole in your pocket. It's $60 each week; it doesn't sound like a lot, but to a student who's working 15 hours a week, $60 is a lot of money."
She'd jump at an offer that included a little guidance and a gas card.
"If I was deciding between two or three cars that were comparable in fuel efficiency, price and design, I'd be inclined to opt for the car that offered more incentives."
And, if a dealer could help find the right insurance, "I'd definitely be willing to refer friends and family to them."
When Morrison, 24, is ready to buy, she'd consider an electric vehicle.
"I would consider buying one even if it was a bit more expensive. I think this would make it easier to rationalize buying a car as a trade-off for biking or public transit. And saving money on gas would be nice too."
For this generation, Henderson says you've got to understand their concerns.
"Incentives and programs that demonstrate that auto makers care and understand the needs of millennials are critical," he says. "This would be a great opportunity for auto makers and their dealers to provide a free gas card if they purchase a new vehicle as well as show them how buying a newer more fuel efficient vehicle not only saves them money, but also helps the environment, two things we know will relate well to the millennial audience."
A look at some Incentives for students and graduates:
Many auto makers offer incentives to students and graduates with documentation of enrolment or graduation. Here's a sampling:
General Motors: The GM Student Bonus program is open to students and recent grads with up to $750 off when you buy or finance a Chevrolet, Buick, GMC or Cadillac.
Volvo: A $1,000 rebate is available until Jan. 2, 2015, for students or post-secondary graduates with proof of eligibility.
Nissan: The Nissan Grad Program pairs current special rates with a 0.25-per-cent deduction on lease and finance rates, and includes four free oil changes during the first year of the lease or loan.
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