Detroit Auto Show: Marketing to Gen Y is No Easy Task

(MoneyWatch)  The demands of Gen Y, the generation that is now 17 to 28 years old, pose a major challenge for the auto industry in general, and for the Detroit Big 3 brands in particular.

In about 10 years, Gen Y will account for 40 percent of the car market, from less than 25 percent today, according to a study cited by research and consulting firm Deloitte LLP.

Deloitte sponsored teams of MBA students from five graduate schools, who presented hypothetical marketing plains aimed at Gen Y, a discussion called, "Making Cars Cool Again," on Jan. 10, timed to coincide with the press preview for the Detroit auto show.

The presentations were based largely on a Deloitte survey of just over 1,000 17- to 28-year olds. Gen Y bases automotive purchases on many of the same things older buyers want, especially safety and comfort, said Michelle Collins, Deloitte vice chairman and automotive sector leader.

But the student teams said that in addition, up-and-coming buyers also want a long list of attributes that in many ways contradict each other, such as fuel efficiency and high performance; distinctively different exterior styling, and authentic brands.

They also want a wide array of customizable options, which increases manufacturing complexity and costs, but they don't want to pay too much. Nor do they want cars that are "too" cheap.

"This is a generation that wants it all," said Ryan Gelisse, a student at Michigan State University. He said Gen Y has "an unprecedented sense of entitlement."

Not only that, they're tough to market to. Gen Y dislikes traditional media, and dislikes being told in an obvious way that something is consciously aimed at them, so they "should" like it.

Even brands like Scion from Toyota, and Mini from BMW, didn't quite hit a home run with the student teams, even though those brands share many of the attributes Gen Y members say they like -- especially the ability to custom-order a car in great detail.

"There's not one brand out there that's doing this correctly," said Todd Hagopian, also of Michigan State. Among the other teams, the BMW and Jeep brands also got some favorable mentions.

Jeep was an exception that proved the rule, in that most younger buyers don't consider domestic brands. Only 16 percent of Deloitte's Gen Y survey respondents said they strongly prefer U.S. brands, said Kevin McKay, a member of the Gonzaga University team.

"This figure has nowhere to go but up," he said. The other teams were from Clemson, Syracuse and Texas Tech.

"Among GM, Ford and Chrysler, the only difference is which one of my grandparents' preferences this (brand) addresses," McKay said.