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CARS
Ford Motor

Study: Gen Y leaving small cars for boxy crossovers

Chris Woodyard
USA TODAY
Ford touts features that will appeal to Millennials in its Escape compact crossover, such as a hands-free hatch

When it comes to top choices for a new car, Gen Y is growing up.

More Millennials — folks born from the early 1980s through the early 2000s — are drifting away from the compact cars that got them through college or their first jobs and moving into roomier crossover SUVs, considered optimal for feeding their addictions to sports and an active lifestyle, as well as for starting a family, a new study finds.

With the leading edge about age 32, many also have better jobs with incomes that can handle the generally more expensive vehicles.

"You can throw your bike into the back of an SUV. You can't do that with a small car," says Chris Travell, a vice president for Maritz Research, which conducted the study that included results from 122,000 participants.

The study finds that cars remain top choices for Millennials overall, but the percentage considering a small car has fallen. For instance, 13.2% said they were considering a compact car in 2008, such as a Toyota Corolla or Hyundai Elantra. Last year, it was down 3.5 percentage points to 9.7%, Maritz says.

At the same time, compact crossover SUVs have made some of the biggest gains. In 2008, 6.4% of Millennials expressed interest in buying a new, smaller-size SUV, such as a Honda CR-V or Ford Escape. Last year, that figure climbed 1.1 percentage points to 7.5%. For larger SUVs, such as a Ford Explorer or Hyundai Santa Fe, the increase was 1.7 percentage points.

They are findings that automakers need to take seriously. Gen Y consumers now account for 26% of new-car retail sales, surpassing the older Gen X generation ahead of them at 24%, a J.D. Power and Associates analysis found recently.

With half of all Millennials saying they expect to buy a new car in the next four years — and four out of five of those saying they want to buy new instead of used — Ford's aggressive efforts to woo Gen Y are paying off, says Amy Marentic, Ford's global car and crossover marketing manager. She says Ford has jumped from fourth with Millennials among top brands for cars in 2008 to first place last year in the Maritz survey, leapfrogging top Japanese brands.

Now, she says Ford aims to have similar Millennial success with Escape and Explorer. "They are still looking for great fuel economy, but they want something that will fit more of their stuff," she says.

Automakers also are all over the trend, with a raft of new, ever-smaller crossovers aimed at urban buyers on sale now or on the way for 2015, including the Chevrolet Trax, Jeep Renegade and Honda HR-V. Luxury automakers also are adding smaller, less expensive crossover SUVs — such as the Audi Q3, BMW X1, Lexus NX and Mercedes-Benz GLA — that can ride the trend and perhaps capture Millennials moving up to their first premium-brand car.

Gen Y craves luxury, and once Millennials get it, they don't want to go back, Mercedes-Benz USA CEO Steve Cannon told reporters over the weekend in Carmel, Calif.

As for all the talk about Gen Y's supposed indifference to cars, they are, indeed, stepping up to buy.

Cars are "just so wired into American culture," Cannon says.

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Changing Millennial tastes in vehicles

Percentage of Gen Y buyers who say they would consider buying a new vehicle in these five segments, the top five for Millennial buyers:

  • Vehicle type: 2008, 2013, change
  • Subcompact car: 3.18, 2.51, -0.67
  • Compact car; 13.24, 9.7, -3.54
  • Midsize car; 14.35, 11.44, -2.91
  • Small SUV; 6.37, 7.51, 1.14
  • Midsize SUV; 5.29, 7.01, 1.72

Source Maritz Research

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