Foreign Affair: Young Car Buyers Shunning Domestic Cars

[AF News Desk]

According to a story from the Detroit News, young car buyers are increasingly looking to the foreign car market for their next automobiles.

The decrease in domestic interest is considered to fall on the shoulders of a better use of technology, a more youthful approach to styling and a vibe that says "hip."

The story from the Detroit News:

Originally Posted by Christine Tierney - The Detroit News, 7/7/11

In a troubling sign for Detroit, import brands appear to be winning over the new generation of American car buyers, people between the ages of 18 and 27.

This group, known as Generation Y or "Millennials," is showing an even greater preference for Asian brands than the Gen X consumers before them, according to a study by TrueCar.com, a data firm in Santa Monica, Calif.

The car brands with the biggest proportion of Gen Y buyers were Japanese, South Korean and German, according to the study, conducted in 2009 and 2010. Those were tough years for Detroit's automakers and also for Japan's Toyota Motor Corp.

Toyota's Scion brand had the biggest share of Gen Y customers — 21.2 percent — followed by Mitsubishi, Mazda, Nissan, Volkswagen and Kia. Rounding out the top 10 brands were Hyundai, Honda, Toyota and Subaru. The highest-ranked domestic brand was Chrysler Group LLC's Jeep, in 12th place.

"Based on the data, it's something for the domestics to worry about," said Jesse Toprak, a market analyst at TrueCar.com. "It shows that some of these brands come across as more youthful or hip, or have better integrated use of technology."

While Gen Y customers seem slightly less loyal than older consumers, Toprak said, "what you own is still the biggest determinant of what you'll buy next."

This generation of people born after 1983 isn't spending a lot of money yet. Of the top 10 models with the biggest proportion of the Millennial owners, the most expensive are the sporty Volkswagen Jetta GLI, costing on average $24,635.

The only U.S. model in the top 10, the Ford Focus Coupe, sells for $15,040, on average.
But while these customers aren't big spenders, automakers are eager to attract them.

"Generation Y buyers are very important to automakers because they help set trends, from popularizing social media sites, such as Facebook or Twitter, or technologies such as the iPhone and iPod," Toprak said.

Millennials appear to favor cars, such as the Scion tC and Honda Civic Si, that permit a high degree of customization.

"Our young buyers are looking for ways to connect with their personal devices," said Craig Taguchi, a spokesman for Scion.

He said the brand was serving the purpose for which it was established — "to attract buyers who wouldn't consider a Toyota," adding that 70 percent of Scion buyers are new to the Toyota family.

ctierney@detnews.com

(313) 222-1463

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[[Our View]]

This isn't terribly surprising. In terms of appealing to younger audiences, the winner the last several years has seemingly been foreign market companies trying to bring together sleek design with economical vehicles that are tech-friendly. Conversely, the domestic marketplace seems to be inundated with companies trying to catch up in this respect.

What do you think? Are the domestic markets in trouble or just biding their time?

[BullShifter]

Look at American cars. Usually they are cheap looking and of poor quality. I've been in the car business for 16 years and I never recommend an American car. It's sad but it's the truth. Personally when it comes to working on them Japan is my first choice, then German. American cars are at the bottom of my list. They have done it to themselves.