The youngest string of consumers are commonly referred to as Generation Z; and when it comes to buying a car, they want something small, simple, and inexpensive, where in the past car buyers have often opted for larger and more feature filled vehicles. Gen Z buyers — those between 16 and 21 years of age — have continuously gravitated toward purchasing smaller cars, all according to a study by MaritzCX, reported by The Detroit News. There are several strong reasons powering this trend, and with this new generation of car buyer perusing the market in droves, auto manufacturers are working overtime to stay ahead of the curve.
The customer experience software and research company recently released a study that outlines some of Gen Z’s car preferences. Ford continues to own the lion’s share of the Gen Z market at 8.2%, with its vehicles being the most seriously considered. Toyota continues to nip at Ford’s heels with a healthy 7.2% of the market, followed by Chevrolet with 6.4%. The latest generation of car buyers want the most value for their money, and therefore don’t want to spend a lot in the process. So manufacturers are having to get creative on a multitude of levels in order to appeal to this massive market.
A whopping 34% of the people in the study said that solid gas mileage was their first concern when it came to purchasing a vehicle, thus making it paramount question number one. With gas prices fluctuating every day, the future is quite uncertain for that next fill up at the station. So right out of the gate, smaller cars appear to have an upper hand over larger vehicles; many small cars will typically run on regular unleaded gasoline, making the high price of premium a non-issue for most small car owners. Again, the compact car has an obvious advantage in the petrol department.
Another reason for Generation Z’s continued interest in smaller economy cars is overall price. Money is usually tight for the majority of first-time car buyers, and getting the best bang for their buck is a key concern. So when buying something new, they will often gravitate toward base model vehicles that have lower price tags, lower insurance costs, and are quite inexpensive to maintain. So with this information at their disposal, many young car buyers are crunching the numbers and looking at the long-term cost of ownership online.
According to Edmunds.com, the overall five-year ownership cost of a basic 2014 Ford Focus was about $32,000. This included insurance, depreciation, maintenance, fuel, and any other cost you would run into with a daily driven vehicle. What was interesting was that in comparison, Focus’s big brother, Fusion, cost well over $4,000 more to own during that same time period. Would a small SUV from the same manufacturer be a better bet? Think again. A base model of the Escape wasn’t cheaper to own, costing almost $38,000 over five years, and thus solidifying the fact that a smaller economy car is still the obvious winner for this budget-minded buyer.
Generation Z is filled with tech-savvy, time-sensitive, interconnected individuals. They want to be able to easily navigate the urban core of a city, slide into a tight parallel parking spot without incident, load their friends into an attractive automobile, and get well over 35 miles per gallon on the drive home. They don’t want built-in navigation in their economy compact car, they have a phone that can handle that task just fine. A powerful engine isn’t necessary, as fuel economy is the name of the game nowadays. There is no need for a truck bed here, as Ikea now has home delivery. And there is no need for things like leather interior and heated seats because these things are merely creature comforts, and expensive ones at that.
So now that auto manufacturers know what this latest generation of car buyers wants, what are they doing to cater to these throngs of penny pinchers? Apparently, quite a lot. In a 2013 report by Kelly Blue Book, 10 cars were reviewed that all cost under $18,000 and that were actually deemed “cool.” Features like “Eyes Free Mode” communication with Siri in the Chevy Spark made texting and driving a danger of the past. Parallel parking proved to be a breeze in the microscopic Fiat 500, who boasted 40 miles per gallon highway to boot. The ever–utilitarian Honda Fit made the list, with its impressive fuel economy and spacious interior that lends itself to its ever appropriate title. There was also the Kia Soul, which received high marks for its Bluetooth connectivity, iPod integration, and auxiliary output jack for all the tech nerds out there. While every car on the list had its own “cool factor,” they all shared one single set of similarities. They were all fuel efficient, smaller in stature, and incredibly inexpensive. A perfect trifecta for the Generation Z buyer.
Generation Z isn’t going to stay frugal forever. Their taste in cars will surely change as they enter the workforce, earn more capital, and begin to tire of that old economy car they’ve been driving around since college. Then it will be time for automakers to appeal to the next generation of car buyers, who might in turn prove to be more price wary or technology dependent than their predecessors. But until that time comes, automakers are going to keep producing a bevy of attractive and inexpensive vehicles for the two billion people worldwide who make up Generation Z. After all, they are the largest single age cohort in the world, and it is impossible for automakers like Ford to ignore that fact.
So why does Ford continue to have the upper hand? According to Sheryl Connelly, Ford’s futurist, Gen Z buyers, “… tend to be more nostalgic and prefer brands with a strong history.” And per the MaritzCX report, over 41.1% of Gen Z buyers opted for a compact car over all others. Since Ford already has the majority of Gen Z’s attention, it is investing a lot of time, money, and energy into keeping it by providing affordable compact cars that are tailor made to this emerging demographic. Fuel efficient, technology-laden economy cars aren’t going away from the looks of it, and their numbers are sure to rise since new manufacturing techniques continue to lower the overall sticker price on most entry-level vehicles.
“Making decisions based on fuel economy and value explains why these buyers tend to shop brands like Ford, which builds vehicles that prioritize these attributes,” said Chris Travell, vice president for strategic consulting at MaritzCX. This fact was touched upon in a 2014 trend report that Ford released, where Generation Z was the key topic of discussion, and undoubtedly an exciting one at that. Ford is well aware of the fact that modern day buyers want more for less, and that it is up to it to bring these two elements together and into fruition. Ford says that this latest generation of consumer is “motivated to buck conventions and set new standards, to reject the stigma of failure, and to embrace new forms of mobility that enable more freedom and creativity.” Which sounds a lot like words to live by, especially when designing a car for Generation Z.