CIAS 2016: Toronto auto show packed with cars for 'mainstream' millennials
As Toyota scraps Scion, it’s clear Generation Y isn’t sold on youth-centred brands
All the hashtags in the world couldn't save Scion. Earlier this month, Toyota said sayonara to the youth-centric brand.
With its unorthodox silhouettes and customizable trims, guerrilla marketing campaigns and social media schticks, Scion was Toyota's oblation on the altar of Generation X. An experiment to make customers of a generation that wanted nothing to do with the stodgy minivans and station wagons of the boomers.
For a while the experiment worked. Then Generation X got older and moved on, and Scion fizzled with Generation Y.
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Yes, the millennials. That demographic of curious consumers — stereotyped as entitled, technology-steeped, bike-pedalling condo-dwellers — with a disdain for driving that will supposedly prove ruinous for car makers.
To a degree, some of that is true. There's no question young people are driving less than their forebears. Urbanization, an explosion in ride-sharing options and changing attitudes towards cars have coalesced to make Gen Y a bit of an enigma for the auto industry.
But millennials, now the most numerous generation in both the U.S. and Canadian labour forces and wielding increasing spending power, are buying cars again.
As it turns out, car makers didn't need to reinvent the wheel to lure them back.
"Our data never showed that this generation wasn't interested in owning a vehicle. Every time we did a study, we would find that they aspired to own a car," says Michelle Krebs, senior analyst for Autotrader.
Function over form
What, then, really killed Scion and the host of subsequent youth-focused offerings that manufacturers cooked up to try to sell cars to millennials?
The answer would have made Gen X cringe, crank up the R.E.M. and speed off in a souped-up sedan.
The reality is that "millennials are more mainstream in their buying than Gen Xers," Krebs says.
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"Research shows they want established, highly respected global brands. We call it the mainstreaming of the millennials because they are buying exactly the kinds of vehicles that baby boomers do, really."
The biggest difference is that millennials put a higher premium on digital features, expecting their vehicles to sync seamlessly with wireless devices. That's still a work in progress, Krebs says, but nonetheless Gen Y — especially those within the cohort who are now having families of their own — are buying up more cars than even the industry anticipated.
The truth is that usually when you target a group specifically, it feels really inauthentic.- Jessica Caldwell, Edmunds analyst
Last year marked the third straight year of record car sales in the U.S. and Canada. Interestingly, purchases of compact SUVs was the biggest driver of growth, according to Krebs. Preliminary data suggests it was in fact millennials and boomers who did most of that buying.
It's clear that carmakers have got the picture. Walking the cavernous halls of the Toronto auto show this year, it'd be impossible not to notice the sheer number of crossovers and small SUVs.
Luxury and mid-market brands alike are getting in on the action. Even Tesla, the California-based electric car manufacturer, showed off its sleek Model X.
The shift to utility vehicles is paying off with young people.
Two years ago, market research company J.D. Power reported that millennials had surpassed Gen X in total new car purchases in the U.S., second only to boomers. And last spring it reported that millennials made-up 27 per cent of all new purchases in 2014, up from 18 per cent in 2010.
There's potential that the number of Gen Yers buying a vehicle will continue to increase. A 2014 survey by Deloitte, for example, found that 80 per cent of millennials in the U.S. planned on buying a car in the next five years.
All about authenticity
But in the wake of the financial crisis, the picture was far less encouraging from the perspective of the auto industry. Young people saddled with debt and struggling to find stable jobs put off all kinds of big purchases.
This effect was exacerbated by changing attitudes toward cars. The quintessential symbol of youthful freedom was more like a rolling prison of debt for young people.
"Cars were once a connective tissue between youth and adult life. They were a way to be free, to be connected to people. Millennials were the first generation that could do that without leaving the house," says Darren Ross, senior vice-president of solutions at the marketing firm Fluent.
Automakers panicked. They poached hip marketing minds to crack the millennial mind and tried to win back young people with cockamamie marketing campaigns and unorthodox offerings.
But it was a misguided approach. Scion is a case in point, says Jessica Caldwell, senior analyst at Edmunds.
"The truth is that usually when you target a group specifically, it feels really inauthentic. I think what they learned is that you can't really develop a brand, especially cars, to a specific age group because it's more about a lifestyle," she explains.
"The thing we are seeing is, you're not really buying a car because you're a millennial, or because you're a woman, or because of some demographic characteristic. People just buy cars that make sense for them."