Quotes of the Day
Pity the automaker trying to pitch a new car to today's style-conscious young American. That customer lives at the end of a bumpy, uphill road — as shown by the early response to Honda's Element. A boxy, SUV-like vehicle launched last year, the Element is what Honda calls a "dorm room on wheels." It was designed to appeal to young drivers who want to pile in gear and friends; TV ads show sexy college-age kids taking it to the beach and partying beside it. It's an alluring image — especially, it turns out, if your hair's thinning, you're hankering to recapture the feel of those footloose days, and you've got carpool duty for Little League this Saturday. The Element is selling nicely — but to folks whose average age is 42. And, of course, once 21-year-olds see boomers behind the wheel of a new car, they're likely to steer right on by.
You might think that sellers wouldn't care who buys their cars, as long as the money is green. But automakers worry about it a lot. They think it's essential to lure buyers as early as possible, so that they will develop a brand loyalty that might last a lifetime. That pursuit is one of the most maddening in the car business — but carmakers are chasing the young with a fervor not seen since the '70s. Toyota has just launched Scion, a new car brand aimed at recent college grads who want an affordable, functional vehicle (with body styling so odd it hollers "check me out"). Other automakers are working to rebrand their existing youth cars and polish the image of these vehicles by stuffing them with higher-performance engines and hot-rod accessories. The ultimate prize: billions of car payments that will flow from Generation Y. The 68 million Americans born between 1977 and 1995 represent the largest demographic bulge since that of their boomer parents and will drive car sales over the next two decades. About 3.5 million Gen Y drivers get their license each year. Automakers are clamoring to provide their first new car, even if it's a cheapie, in hopes of selling them pricier vehicles later.
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Youth tastes are so whimsical, though, nobody knows what will be a hit. Assaulted by ads all their lives, teens and twentysomethings are growing immune to most sales pitches. Says marketing consultant Jim Bulin, 61, based in Northville, Mich.: "They don't want some company to say, 'We've got your number, and here's your product.'"
Recent hits with the youth market have tended to be flukes. Despite Honda's sales conundrum with the Element, the automaker has one of Gen Y's most popular brands, in large part because its durable little Civic scored with hot rodders who decided to customize it with turbochargers, flashy rims and other trimmings. Honda now holds 12% of the under-25 market (the favored industry shorthand for Gen Y) vs. a 6% share of the overall market, according to the research firm J.D. Power. The mystery is that the Civic was not particularly designed for or targeted to young drivers. Says Bulin: "A generation of kids looked around and couldn't find anything in synch with what they wanted — so they went to VW and Honda because those automakers came closest."
Most automakers aren't so lucky. Toyota became popular in America with the baby boomers, and its brand has aged alongside them. The median age of Toyota's new car buyers steadily rose during the 1990s to 47 today. The only brands with older buyers are Buick (63), Cadillac (55) and Chrysler (50).
With the Scion, Toyota is trying to apply the lessons of earlier miscues. It launched the $10,700 Echo in 2000 to provide what its researchers thought the youth market wanted: a bargain-price small car. But young buyers largely shunned the Echo, marketing analysts say, because they didn't like its toy-car styling and weak engine. The Echo also may have lost some young shoppers, because from the start, it sold well to middle-age drivers who liked its low price, fuel efficiency and reliability. Just 8% of Echo buyers are under 25--considered a poor showing for its price range, according to automotive consulting firm Strategic Vision, based in San Diego.
Toyota is taking a U-turn of sorts with the Scion. The first two Scions, the xA and xB, have a truncated look popular with young buyers abroad but unproven in the U.S. At the port of Long Beach, Calif., where the vehicles arrive, Toyota has set up a facility to customize Scions with any of 40-plus accessories, from side-panel graphics to funky interior lighting to flared fenders. Toyota is sharing technical specifications for the Scion with an association of custom-parts makers — the first time it has done so — in hopes that they will develop components like turbochargers that are popular with the hot-rod crowd.
The Scion is being launched in California before being rolled out to the South, the East and finally the Midwest over the next year. Fearful that too many moms and pops might buy the Scion and tarnish its hoped-for hipness, Toyota shunned mainstream advertising and spent a year stealthily marketing the car by planting it outside bars and coffee shops near college campuses and at raves and concerts. Toyota also courted staffers at hip-hop fashion magazines, like Yellow Rat Bastard, to take test drives.
What's the response? When a TIME correspondent steered an xB around the UCLA campus, her car drew a lukewarm reception. Student Sam Brady, 22, said he wouldn't buy one because "I'm more of a sports-car guy." Another student, Jeff Barry, 21, wasn't sold on the styling, but said, "I'd drive a souped-up Shaq edition." At Toyota dealerships in Los Angeles the car is selling to a mixed age group. Sarah Huante, 34, of Torrance, Calif., the mother of a toddler, recently purchased an xB as a family car, rather than for accoutrements like its dashboard disco-lighting. "It feels roomier than a PT Cruiser," she says, referring to another car she was considering — a model marketed to young buyers but favored more by boomers.
A special challenge for Detroit's automakers is that their entry-level cars — the heart of the youth market — rarely turn a profit. Such cars make money for only the most efficient automakers, and while the Big Three racked up nice efficiency gains, according to a study published last week, Detroit still takes a backseat to import brands.
Their strategies? Chrysler, which recently killed plans to build an entry-level pickup, is banking on cars like its Dodge Stratus coupe, which comes with a relatively brawny engine. Nearly 30% of that vehicle's sales are to Gen Y, one of the highest percentages in the industry (on average, 4% of new-car sales are to people under 25). GM is betting that a forthcoming version of its Cavalier nameplate (rumored to be called "Cobalt") will help spur that brand's sales to Gen Y. And GM is determined to reinvigorate its Saturn brand. An estimated 3% of buyers for L-Series models are under 25, and Saturn has announced production cutbacks for Ion, another car marketed to Gen Y. "Saturn almost had us," says Courtney Carreras, 32, editor of Yellow Rat Bastard. "They had that third door, which was kind of cool. My mom drives one, but I don't think I'd buy it."
Ford, celebrating its 100th birthday, is also laboring to look young again. Its Mustang, long a reliable seller to the young, will get a redesign next year and an ad blitz aimed at Gen Y. Ford hopes its next generation of entry-level cars will boost its fortunes. The peril, of course, is that by the time Ford — or any other automaker — thinks it knows what's cool, it may be looking in the rearview mirror.
- Daren Fonda