Johannesburg - Although 80 percent of Generation Y consumers in South Africa are interested in buying new vehicles over the next five years, 75 percent are willing to give up their vehicle if the costs increase, according to a Deloitte study.
Generation Y refers to people born during the 1980s and early 1990s.
The inaugural Deloitte 2014 Automotive Consumer Study said this indicated vehicle manufacturers would need to maintain a fine balance between these two views if they were to win this share of the market.
This generation ranked affordability (76 percent) as the most important criterion, followed by operational and maintenance costs (68 percent) and lifestyle needs met by walking or public transport (46 percent).
Affordable vehicle finance options and fuel efficiency were ranked highly by Generation Y, and among the top reasons for purchasing a particular vehicle, but also mentioned as reasons for not buying.
Bronwyn Kilpatrick, the automotive manufacturing industry leader at Deloitte, said unlike older generations, Generation Y was more price sensitive when making car purchasing decisions.
Kilpatrick said vehicle manufacturers should take note of this because it indicated that many Generation Y consumers were looking for value and lower maintenance costs rather than aesthetics and status. She said manufacturers needed to become more innovative, particularly around financing, to improve affordability.
She said the purchase cost would probably drop if vehicles had more local content rather than a high level of imported components that were subject to exchange rate fluctuations.
There was not much brand loyalty among Generation Y consumers in South Africa, Kilpatrick said, and customer service was important in reselling the brand to consumers.
Vehicle makers that were able to offer customers a choice of models and an ownership experience focused on convenience and at a lower cost than competitors were likely to win over these young consumers and build future brand loyalty with them, she said.
“The survey’s findings present some complex challenges and opportunities for [vehicle] makers that are desperately trying to better understand and connect with this young, powerful and increasingly influential market force,” she said.
Deloitte South Africa said it undertook a detailed study of Generation Y to help car manufacturers remain ahead of the game in a competitive marketplace as part of a focus on the changing nature of mobility.
Other trends emerging from the survey were that 70 percent of consumers surveyed indicated that high operational and maintenance costs were the top reasons for not buying a car; convenience was key for Generation Y consumers, who were willing to pay for services that made their lives easier; and Generation Y trusted family, friends and websites when making purchasing decisions.
Unlike previous generations, the survey revealed that Generation Y had a positive image of car dealers, with more than a third indicating they would prefer to go straight to the sales process and skip negotiation. It also revealed that 89 percent of Generation Y spent more than 10 hours researching and considered more than three brands when making a decision.
Family and friends (63 percent) were the most trusted advisers in vehicle research, followed by manufacturers’ websites (61 percent). Only 49 percent would consult sales people and 26 percent would check social networking sites.