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Autos: Not Your Father's...Whatever
BusinessWeek Online
Wednesday March 10, 8:27 am ET

When it comes to young car-buyers, the '70s and '80s haunt Detroit like a ghost. During the oil shock, the Big Three were late making the move toward small, fuel-efficient cars, and handed a new generation of penny-pinchers to Toyota (NYSE:TM - News) and Honda (NYSE:HMC - News). Later, U.S. auto brands compounded their error, offering horrible styling and quality to newly affluent baby boomers. Many fled to Mercedes-Benz (NYSE:DCX - News) and BMW. The resulting love affair fueled import growth for almost 30 years. The Big Three bled market share and eventually had to kill struggling brands like Oldsmobile and Plymouth.

That epic shift in loyalties explains why U.S. and foreign auto makers devote so much attention to Generation Y, today's 16- to 24-year-olds. The group already buys 850,000 cars a year, about 6% of U.S. vehicle sales. According to Toyota, about 63 million kids will be driving by 2010. "This generation is bigger than the boomers," says James Press, COO of Toyota Motor Sales USA Inc. "We need to build the same relationship with them that we have with their parents."

Imports still have an edge with kids. Because Toyota, Honda, Nissan (NasdaqSC:NSANY - News), and Hyundai refresh their small-car lineups more frequently than Detroit, many of their models boast younger average buyers. But no brand -- import or domestic -- has truly locked up the loyalty of the youth market, despite millions spent on wild designs and brash marketing. The most aggressive looks, from cars like the Pontiac Aztek, Chrysler PT Cruiser, and Toyota Echo compact, all struck out with kids. Honda Motor Co.'s boxy Element hit the market with a splash last year, but it has lured more fortysomethings than hipsters. "A big mistake car companies make is they assume that because kids have three piercings that they want to drive something obnoxious," says Wesley R. Brown, an analyst at Iceology, a trend research firm.

LONG WARRANTIES. In truth, carmakers are discovering yet again that the primary selling points for kids are the same as 30 years ago: price and value. The average sticker price for a new car sold to buyers under age 24 (most of them buy used cars) is $15,000, says CNW Marketing Research Inc. Says Eric Noble, president of The Car Lab, which has studied the market for auto makers: "A youth car is just a cheap car."

Little surprise that two South Korean cars -- Hyundai Motor Co.'s $10,000 Accent and $13,000 Elantra -- have the youngest average buyers of any on the market, at age 24. Hyundai's long-term strategy is much like that of Toyota 25 years ago: Get younger buyers to graduate from its econo-cars to bigger and more expensive vehicles.

Toyota's Scion family of cars may be the industry's most radical step toward offering young buyers great value in an unconventional package. But even it has had just modest success. Scion buys little network TV airtime; most ads run in select shows on Comedy Central and MTV. "We choose our programming very carefully," says Scion sales and promotions manager Brian Boulain. Scion also uses lots of "buzz" marketing, holding test drives at restaurants and popular music and clothing stores.

U.S. auto makers, however, don't have that luxury. With their higher cost base and emphasis on big-margin trucks in recent years, GM, Ford, and Chrysler (NYSE:DCX - News) devoted little attention to the small-car market. All the domestic carmakers offer deep discounts on compact cars, but most of those models have grown long in the tooth. General Motors Corp. (NYSE:GM - News) will try to change that this fall, when it finally replaces its decade-old Chevy Cavalier with the Cobalt, a fresh-looking compact with interior craftsmanship that makes it competitive with Japanese models. GM has had some success targeting younger buyers with the $17,000 Pontiac Vibe -- the average age of Vibe buyers is 38, vs. 46 for all Pontiacs. Ford Motor Co. (NYSE:F - News) has no discernible youth strategy but sells its Focus compact and a stripped-down Mustang for below $17,000. The all-new Mustang coming next year will cost a bit more.

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Auto makers still dont understand how to advertise to the youth market. They always end up trying way to hard and only hurt themselves in the process. Just look at Honda and the Element for proof. While the strategy for Scion is a much better one, I think it will be the same. Scion will start out strong like Saturn did, but after the buzz has died down sales will falter.
 

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Well, GM is getting back into the game with its line up. Dodge has a hit with the SRT4, but the neon needs a mega update. And the focus needs to stop looking like crap.
Being a gen Y'er, but also being a muscle car guy, I think commercials that show off features, sportiness, and value, thats what sells. The Aveo is doing semi good. It doesnt say word one about its features. Not one word about the MP3 radio. GM aslo needs the Aveo to be more customizable. But also, gen y'ers dont really care what car it is as long as it looks cool. Unless its a Benz, Bently, Caddy, or a Rolls, they really dont care about what the badge is onthe hood.
And you are gunna get more of the younger baby boomers into these hip cars because they wana be hip too.
Man, I wish I lived 30 years ago... muslce cars out the rear.
What I dont understand is how all these companies think that small hatch backs is what gen y'ers want? How do you know they dont want large sedans? Its going to be the case of the GTO. Who will hit the market first with a brand new product that will light up the young crowd, wanting more of that car. Nothing took over the young crowed like muscle cars and pony cars did. I wish my generation was more like that... stupid ricers.
 

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Have any of the car makers asked the younger buyers what they are looking for in a car? Or do they rely on what "analysis" telsl them?
 

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When I was a 16 y/o my first car was a 1979 Pontiac Lemans with a 301 2bbl from a little old lady with only 60k miles on her. It was all I could afford at the time. This was in 1987. A Cav was going for 9-10K along with a Ford Escort or a Dodge Shadow. Most teens my age or older couldn't afford those cars new and always had to buy used. Of course we were only making $3.60 per hour. Todays youth is a much different breed. Lots of guys ages 17-24 are driving new Hyundai and Toyota compacts. And an amazing number are driving sport utes. I think todays generation is going to be tough to nail down on what they want to buy.
 

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Originally posted by bigals87z28@Mar 10 2004, 01:58 PM

What I dont understand is how all these companies think that small hatch backs is what gen y'ers want? How do you know they dont want large sedans?
I'm 23 years old and I personally have no interest at all in any of the cars that are marketed to people my age. Cars like the Accent, Echo, and, worst of all, the Aveo are being pushed upon us young people as being "hip" and "youthful". In fact, I know very few people my age like any of these "youth-oriented" cars either, even the people who drive them. The only reason why gen-Yers [who can afford to buy new cars] buy them is PRICE.

And this perplexes me. I can't understand why a car can't be priced and sized like the Aveo and yet have a stylish body. How much extra would it have cost to slope the roof line and make a coupe version?

For some reason, carmakers are really pushing the sub-compact sedan and I don't know why. Most young people like sporty coupes. NOT stubby, boxy, awkward sedans. Aveo--not cool. Echo--not cool. Echo Hatchback--ich! Neon--looks like a little pig. The only reason why they sell is because we can't afford anything better, not because any of us like them.

Myself? By the time I get out of school a 2000 Cadillac STS will be worth less than $20,000 CDN so my choice is pretty easy. A lot of my friends have made similar choices by buying used, large sedans, such as the Concorde or Impala.
 

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Originally posted by Jay+Mar 10 2004, 10:30 PM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Jay @ Mar 10 2004, 10:30 PM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-bigals87z28@Mar 10 2004, 01:58 PM

What I dont understand is how all these companies think that small hatch backs is what gen y'ers want?  How do you know they dont want large sedans?
I'm 23 years old and I personally have no interest at all in any of the cars that are marketed to people my age. Cars like the Accent, Echo, and, worst of all, the Aveo are being pushed upon us young people as being "hip" and "youthful". In fact, I know very few people my age like any of these "youth-oriented" cars either, even the people who drive them. The only reason why gen-Yers [who can afford to buy new cars] buy them is PRICE.

And this perplexes me. I can't understand why a car can't be priced and sized like the Aveo and yet have a stylish body. How much extra would it have cost to slope the roof line and make a coupe version?

For some reason, carmakers are really pushing the sub-compact sedan and I don't know why. Most young people like sporty coupes. NOT stubby, boxy, awkward sedans. Aveo--not cool. Echo--not cool. Echo Hatchback--ich! Neon--looks like a little pig. The only reason why they sell is because we can't afford anything better, not because any of us like them.

Myself? By the time I get out of school a 2000 Cadillac STS will be worth less than $20,000 CDN so my choice is pretty easy. A lot of my friends have made similar choices by buying used, large sedans, such as the Concorde or Impala. [/b][/quote]
"Myself? By the time I get out of school a 2000 Cadillac STS will be worth less than $20,000 CDN so my choice is pretty easy."

You are lucky!You can get that 00 STS for $20,000 already.That are an unbelieveable car.It is hard to keep under 140 km/p.

"And this perplexes me. I can't understand why a car can't be priced and sized like the Aveo and yet have a stylish body. How much extra would it have cost to slope the roof line and make a coupe version? "

How hard would to design some WOW factor into sub-compact.My children in their early 20's laugh at the Echo, Aveo. I have not really seen 20's people drive these cars. Around here most are in Sunfire Cav's and Civics
 

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Originally posted by airbalancer@Mar 10 2004, 06:35 PM

How hard would to design some WOW factor into sub-compact.My children in their early 20's laugh at the Echo, Aveo. I have not really seen 20's people drive these cars. Around here most are in Sunfire Cav's and Civics
Maybe I'm just oblivious, but I have yet to see ANYONE driving an Aveo despite the fact that dozens sit on dealers' lots. It appears as though people are opting for the slightly less comical Optra, which I have seen several of.

AVEO... does this mean "young, poor people must look silly when they drive" in some foreign language?

[I really hate this car]
 

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Originally posted by Jay@Mar 10 2004, 07:10 PM
AVEO... does this mean "young, poor people must look silly when they drive" in some foreign language?

[I really hate this car]
I've often though that myself about all of those "economically priced" cars. They all look like crap and are basically a visible, rolling stigma for those who own them. I'd drive a better looking used car any day.
 

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I can only speak for myself, but I want POWER. I'm power hungry, the more the better. I really dont care about it being leather interior, or a fancy MP3 player, or power seats, windows, locks, etc. Give me a turbocharged I4 or S/C V6 with a 5 speed and a half-decent interior (CD player, 3 spoke steering wheel, sunroof is all I ask for) and I'd buy 5 of them.

P.S. Dont make it look like a Scion, or Echo, or Cavalier, or any of those other hideous creations. Just give it an aggresive shape, thats all I ask.
 

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Originally posted by Randle2I@Mar 11 2004, 02:56 AM
I can only speak for myself, but I want POWER. I'm power hungry, the more the better. I really dont care about it being leather interior, or a fancy MP3 player, or power seats, windows, locks, etc. Give me a turbocharged I4 or S/C V6 with a 5 speed and a half-decent interior (CD player, 3 spoke steering wheel, sunroof is all I ask for) and I'd buy 5 of them.

P.S. Dont make it look like a Scion, or Echo, or Cavalier, or any of those other hideous creations. Just give it an aggresive shape, thats all I ask.
Good luck. It's you vs. this entire messed generation. <_<

and guess what the automakers would rather cash in on?
 

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Originally posted by Randle2I@Mar 11 2004, 02:56 AM
I can only speak for myself, but I want POWER. I'm power hungry, the more the better. I really dont care about it being leather interior, or a fancy MP3 player, or power seats, windows, locks, etc. Give me a turbocharged I4 or S/C V6 with a 5 speed and a half-decent interior (CD player, 3 spoke steering wheel, sunroof is all I ask for) and I'd buy 5 of them.

P.S. Dont make it look like a Scion, or Echo, or Cavalier, or any of those other hideous creations. Just give it an aggresive shape, thats all I ask.
cobalt SS coupe? supercharged, 205hp 2.0 supercharged ecotec. And from what I have read on the GM site... I belive the crank was a forged crank. mmmm forged crank, rods... perhaps the pistons? Lotsa power there.
 

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mazda's cleaning up this market right now with the old protege 5 and new mazda 3.... the 3 is a great first car, then they'll stay with mazda and the good looking 6 for their second car...

someone mentioned aveo mp3 player. One of the commercials (in canada anyway) main point is mentioning "an mp3 player available in a car you can afford"...

Pretty sure its the "small like a piranha" commercial.

I really like the cobalt, that should help. My dealer said the aveo is selling well, and I've seen quite a few on the road already.

Other quality good looking GM products that should interest first-time buyers include the Redline Ion, Optra 5, Vibe, Grand Am, GTO, Vue and Equinox.
Not too shabby....
In Canada we also get the pontiac pursuit, not sure how much I like the look yet....
 

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Discussion Starter · #14 ·
The Aveo is OK, but I really think Chevy could use a car like the Canadian Chevy Optra. Unless the Cobalt sells with Cavalier-like discounts or has a super-stripper version, there will be too large a gap between the 10,000 dollar Aveo and the 18K Cobalt.

Honda, the Koreans, etc. are taking dead aim at the 14-15K market.
 
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Patriotism my boy, patriotism.

<_< <_< <_<
 

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Discussion Starter · #16 ·
Originally posted by NewMexico_Sunset_On_RT66_Yep@Mar 11 2004, 11:53 AM
Patriotism my boy, patriotism.

<_<  <_<  <_<
If Chevy can make a car domestically (that isn't 2 decades old) at that price, I'm all for it.

Actually, I'd love to see the UAW use Daewoo's Optra design, and add the current Cavalier's engine 2.2L Ecotec --- after all, it's all "GM" now, so the Detroit guys can take the design and enhance it (beyond what they already have), right? Kinda like how Holden takes Opel stuff and makes it suitable for Australia.

Still, I don't know if the cheapness of the Optra is inherent in the design, or dependent on cheaper labor costs, or both.
 

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My friends and I are in the youth market I guess, we are all 16-22, most people i know in that age group cannot afford a car more expensive than 8000 or 9000, unless our parents buy it or help. Of the "kids" i know who bought there own cars, or had complete control over what car they were gonna get, they chose: newer V6 mustangs(girls) older 5.0 mustangs, 3rd gen F-bodys, older V8 pickups, older 4X4's, grand prix gtp, lumina z34, basically any car that had some balls and sporty looks, V6 stangs excluded. As people got older, and moved on to there 2nd and 3rd car there tastes in cars changed slightly. They went from loud, fast pony cars, to more refined midsized cars with decent performance. If Gm wants to nail this generation, they have to look at what kids get for there first car, and draw ideas from there. A person is going to want a car that reminds them of there teen years, but doesnt have the outlandish styling that goes with it(ex ricers, a ricer at 18 isnt goin to be a ricer at 40, not many 40yo will drive a compact hatchback with 3 ft wing, 5in exhaust, and oddball paintjobs) They need to produce cars that appeal to us and produce cars that will appeal to us later as we get older. The ability to customize and having aftermarket support is going to be critical i think. Kids have the ability now to buy a cheap honda and customize it to what they want, for little money. Kids today want to drive something that sets them off from the crowd, hence the increased sales in sound systems, custom rims, and bodykits(or bodycrap). Look at the cars domestic companys are producing now. Most look the same, most dont have many customizable features, lots of rebadging. Thats why kids go to imports, with imports you get a cheap car, good quality, and a vast aftermarket for you to customize and personalize your car with. Or kids, like my friends and myself, go to 5.0 stangs, 3rd gen f-bodys, basically older pony cars. Those cars already look good, plus they got good performance, and they dont resemble the newer look alike cars at all.

And the general consensus within my friends is the Aveo looks like crap. We dont like the whole fat chubby bathtub look the cars have. We look at the aveo, focus, neon, cav and sunfire and see upside down tubs on skinnys. Seriously, they look like hunchbacks or somthing. Kids are like men goin through a midlife crisis, we both want somthing big or fast or powerful or eye-catching.
And the comment about the neon looking like a fat pig, we share the some opinion.

Just my opinion that happens to be shared with 95% of 16-22yo that i know.
Now someone rip me a new one cause i know yours gonna disagree. :)

Matt
 

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The Aveo is OK, but I really think Chevy could use a car like the Canadian Chevy Optra. Unless the Cobalt sells with Cavalier-like discounts or has a super-stripper version, there will be too large a gap between the 10,000 dollar Aveo and the 18K Cobalt.

I dont think that the Cobalt is going to base price for $18,000. Maybe a snazzy LS model with the powers, but not the base 1SA Cobalt coupe or sedan with a 5 speed manual, ac and 4 speaker am-fm cd. The base a Aveo is $9995, but that is the stripper model, most of the ones that you see on the lot are around $12,000, and you can probably load them up to close to Cobalt prices.
 
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