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Deloitte suggests Gen Y’s embrace of hybrid vehicles may be auto market’s tipping point

Gen Y’s strong affinity for hybrid vehicles could make it the “generation that leads us away from traditional gasoline-powered vehicles,” reports Craig Giffi, vice chairman and automotive practice leader at Deloitte LLP, after seeing the results of Deloitte’s annual survey of consumers and what they want in an automobile. (Deloitte defines Gen Y consumers as those currently ranging in age from 19 to 31.)

59% of Gen Y respondents surveyed prefer an electrified vehicle over any other type of car or truck. Moreover, Gen Y consumers heavily favor hybrid gasoline-electric vehicles (57%) over pure battery electric vehicles (2%) or vehicles with a traditional gasoline-only powertrain (37%).

The annual survey, now in its fourth year, canvassed 1,500 Gen Y, Gen X and baby boomer consumers in the United States, as well as 250 Gen Y consumers in China and 300 Gen Y consumers in Western Europe. Deloitte conducted the survey in September and October 2011.

According to Giffi, Gen Y consumers may be the game changers in the United States because, at nearly 80 million strong, they are one of the biggest domestic automobile buying market segments and the largest consumer segment since the baby boomers. Giffi indicates that, according to projections, one out of four new automobiles sold this year in the United States, and 40% of vehicles sold in the next 10 years, should be bought by a Gen Y consumer.

From the study, Giffi found that Gen Y consumers are drawn to hybrids for several reasons. Most notably, fuel efficiency: 89% of Gen Y consumers are considering buying a vehicle that gets better mileage, especially true when gasoline prices rise above $2.75 per gallon—the median price Gen Y consumers see as ‘fair.’ Further, 49% of Gen Y consumers are willing to pay an additional $300 for each mile-per-gallon of improvement they can get out of a hybrid—only $50 less than the $350 mile-per-gallon premium that Deloitte estimates a hybrid vehicle currently costs compared to an internal-combustion engine vehicle.

Gen Y consumers also view hybrid technology as proven and reliable. Almost 6 in 10 Gen Y respondents prefer a hybrid over any other type of vehicle, while a mere 2 in 100 prefer a pure battery electric vehicle—demonstrating that Gen Y is familiar and comfortable with hybrid technology, but not so much with battery-only technology.

—Craig Giffi

Further, the survey shows that Gen Y respondents are married to the convenience of traditional gasoline-powered automobiles, strongly preferring powertrains that do not require plug-in recharging. Even with their overall preference for hybrids, Gen Y consumers still prefer a non-plug-in hybrid by a margin of more than two-to-one over a plug-in version.

Smartphone on wheels. Joe Vitale, global automotive sector leader, Deloitte Touche Tohmatsu Limited, said that Gen Y consumers prefer automobiles that are an extension of their social-media and digital lifestyles, and suggested that auto manufacturers may have an opportunity to capitalize on Gen Y’s connected lifestyle by developing innovative and low-cost personalization options.

In-dash technology is the most important part of a vehicle’s interior for a majority (59%) of Gen Y respondents, with almost three-quarters (73%) seeking touchscreen interfaces. Gen Y consumers also rank smartphone applications as highly desirable in a new automobile (72%). In addition, they want to be able to customize their automobile interiors after the initial purchase with embellishments that include technology features: 77% would like to buy additional accessories and upgrades for their automobiles on an ongoing basis.

Gen Y consumers clearly view their automobiles as more than just a way to get from point A to point B. They see them as a way to stay connected around the clock, and, they’re willing to pay it.

—Joe Vitale

On average, Gen Y consumers are willing to spend more than $3,000 for hardware that delivers connectivity.

Gen Y consumers also realize that this increased connectivity can create safety issues, but are also willing to willing to pay for technology that can help them better manage all the distractions created by connectivity.

On average, they will shell out approximately $2,000 for a bundle of safety features like collision-avoidance systems, blind spot detection and sleep alert systems. In fact, Gen Y respondents graded safety bundles as their second most important priority—right behind technology bundles—when ranking their desire to buy additional vehicle features.

—Joe Vitale

Deloitte announced the preliminary results of the survey at its Shifting Gears conference yesterday in Detroit. Full survey findings will be released in February.

Comments

HarveyD

This seems to prove that Toyota is on the right track with its HEVs.

My wife and I are not part of Gen Y but our next vehicles with be proven high quality HEVs.

SJC

If the Gen Y people can afford them. That depends on good paying stable jobs, the same factors that promote home sales and family values. If we want a prosperous world for many, we need to figure out what we are going to do about cheap labor and limited resources first.

HarveyD

SJC...prosperity, for the selected few, has always been mostly due to cheap labor and/or the availability of cheap resources or both.

USA enjoyed very cheap labor with African slaves and hungry immigrants for over three centuries. The Civil War and Labor Unions progressively put and end to it. Manufacturing facilities have been moving out for the last 40+ years and it is not so sure that they will come back.

When Oil went from, a ridiculously (fixed) low $2/barrel to $147/barrel and stayed over $100/barrel, it signaled an end to cheap resources. Using 35% to 40% of the national corn crop to produce insufficient alternative fuel made matters worse and further increased the price of food and many commodities.

Meanwhile, the 1% to 3% is having a field day with huge unjustified revenues and very low taxes making the average workers and governments poorer and deeper in debt. Sixteen tons and deeper in debt is still very true for too many.

Is this the beginning of the end of prosperity?

SJC

I look at it as distribution, we could ruin the standard of living for hundreds of millions of people in developed countries and not raise the standard of living one bit for developing and under developed countries.

If is a zero sum game and the old colonialist and neo colonialist models will not work any more. When the world was open to discovery and inventions were yet to be made, it was a different world. A different world requires a new model.

DaveD

"16 tons and deeper in debt": I really thought those days had passed for most of us in America when I was growing up. But we're moving back into them from all signs.

It's like watching a tower build up, taller and taller and taller, with the base getting narrower. What do we think will happen when the tower gets too high and the base too narrow? It won't be pretty.

SJC

It does not have to be, we just need to acknowledge the realities. We would like countries to develop, they make good customers, it is HOW we do it that matters.

Exporting labor intensive jobs may not be bad, if we have better more value added productive jobs to replace them. It was just the attitude that "it will all work out" without planning that makes it uncertain.

ejj

The little hybrids aren't going to be capable of hauling around the growing segment of the US population that is morbidly obese. It's just a matter of time before the Gen Y's become obese too - then they won't fit in these little hybrids. We need large cars and SUV's to move our large people - the only answer is the ICE for these big vehicles.

Herm

The little hybrids do a fine job carrying around 400lb people, without rubbing elbows.. modern designs are very space efficient.

SJC

Many are compact, some mid sized. I don't think that matters as much as responsible and more sustainable than what has happened in the past. This generation knows that fossil fuels are finite, once you use them they are gone...forever.

Treehugger

eji

I don't know you come to this narrow minded position that you regularly expose here, 1st of all it is not true that you need a truck to carry obese people, and it is not true that truck can not be powered by HEV or PEHV because these vehicles already exist, so you made 2 wrong assertions in your post

SJC

He just likes to comment, even if he has nothing constructive to contribute.

HarveyD

The fast growing acquired addiction that bigger and all you can eat it better for us, has to be changed. We have to learn that being bigger and bigger is a major handicap and requires larger clothes, chairs, seats, cars, more fuel, more food, more doctors, more hospitals, more sickness, higher health care cost, lower productivity and less competitive on the world market place, etc. etc.

Why did we (40+% and increasing every year) have to eat ourselves out of a job? We may not be as smart as we think we are? We are easy preys for smart industrial and junk food Adds if they are repeated of ten enough.

Treehugger

Harvey

You summarized, the life of millions of Americans is indeed very sad and hollow...

SJC

Maybe if people did not have to worry about losing their jobs every day they would not eat excess food as a tranquilizer.

HarveyD

Not so SJC...we got almost that BIG with fully employment. Of course, lower revenues drive people to more and more lower cost junk food.

ejj

C'mon HarveyD - overeating & obesity creates jobs! jobs! jobs!

ejj

LAUSD (Los Angeles Unified School District) Students Roundly Reject Healthier School Lunch Menu

http://losangeles.cbslocal.com/2012/01/19/lausd-students-roundly-reject-healthier-school-lunch-menu/

HarveyD

C'mon ejj....that odd avenue leads into a thicker brick wall. How can anyone at 300++ lbs work and/or honestly earn enough to continue to eat 6000 Kcal/day? The notion that (Bigger is Better) has its limits.

For example, great balls of fat (over 300/400 lbs) need much larger cars, use more fuel, wear roads and bridges much faster etc and should be taxed accordingly, i.e based on users pay Constitutional (small prints) obligations? Many airlines have rightfully started to charge for 2 seats for those special (growing in numbers) cases. Subways, buses, trains (and All you can Eat restaurants) should do the same.

ejj

HarveyD - you're being very hurtful, insensitive, intolerant, narrow-minded, mean-spirited and draconian towards those who are gravity-challenged. The obese of our society are VICTIMS, who need our understanding, tolerance, open-mindedness and financial support through new & expanded government programs - it's a civil rights issue!

JMartin

And the rationally challenged as well.

ejj

I was obviously joking --- but those are knee-jerk charges and explanations liberals have for everything.

HarveyD

It may be more a question of where does individual civil rights stop.

Nobody has to endure second and third hand smoking or similar misbehavior.

Why should we pay for health treatments for those 400+ lbs balls of fat if they will not stop drinking 12+ sweet sodas, 2+ lbs of ice cream and 6000+ Kcal of junk food every day? When 40+% of people are obese there is a real serious problem.

The industrial junk food industry is partially responsible for distributing junk food to kids at very young age and create early life addiction and unhealthy behavior. Immature parents are also often responsible by not fulfilling their responsibilities and by being obese themselves.

Obesity, nicotine and other drug addictions are fast growing national problems that USA and many other western nations will have to deal with soon. Growing individual degeneration and deterioration is serious and important for the future well being of the nation. A nation with 50+% obese would have growing difficulties to survive.

ejj

Don't forget taxpayers are paying for the unlimited emergency room healthcare of millions of illegal immigrants and other folks, regardless of whether they are obese or not. We have runaway medicare & medicaid spending & chronic border insecurity yet Obama's answer is to simply keep borrowing more money from China & refuse to act like a responsible adult and make difficult decisions.

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