Morphing for Millennials

by Dan Miller
May/June 2015
Trend watchers claim the brand’s target audience of 18 to 35-year olds—universally referred to as Millennials—just aren’t that into cars. Baby Boomers and Gen Xers couldn’t wait to get behind the wheel.

For them, a driver’s license was their passport to freedom from their parents. But Millennials have other options. They can replicate that rite of passage via social media smartphones, thus sparing themselves the strain of a monthly car payment (on top of student loan debt) in cash-strapped times.

Group Vice President Doug Murtha, however, doesn’t quite see it that way.

“Is there somewhat diminished interest in cars among some Millennials? Absolutely,” he says. “Has the entire generation written off the automobile? Absolutely not. As with anything else, the truth lies somewhere in between.”

Ready for a Renaissance
Murtha points to data that indicates Millennials are the fastest-growing segment in car sales since the end of the recession. A recent study by TransUnion backs up that claim, noting that Millennials now account for 27 percent of total vehicle-loan originations, up from 16 percent in 2009. Further, a J.D. Power and Associate report concluded that compact and small vehicles—Scion’s bread and butter, especially with the iM and iA—account for almost half of those purchases.

“We have a sales plan that will put us back over 100,000 units within the current planning cycle,” says Murtha. “We fully intend to be back. But we know we have some work to do.”

One thing’s for sure: the Gen-Xers of 2003 are not the same as today’s Millennials.

Gen X, known in general for being more opinionated and approaching life in an a la carte manner.

Millennials, by contrast, seem to embrace more of a buffet mentality, preferring to sample and experience everything. As such, they tend to be less against the grain and more pragmatic. That’s not to say that personalization is passé. Rather, Murtha says, it now manifests itself in less flamboyant ways.

“It used to be the car as canvas,” he says. “Now it’s more about the interior and the subtle ways Millennials make their cars their own.”

Personal but Pragmatic
Murtha says the comments of a 20-something woman in a recent focus group are also very instructive. Though admitting she preferred the styling of a two-door coupe, she said she’s much more likely to buy a four-door sedan. That’s because when she looks ahead to when she’ll start a family, she knows she’ll need a vehicle that can accommodate a car seat—even if she’s not married, or even in a long-term relationship, today.

So does that mean all Millennials will naturally gravitate to, say, the Corolla? Think again.

“I use the analogy of Starbucks,” says Murtha. “Even if they like the coffee, some might not go there because they are everywhere. The fact we sell 50,000 of something makes it more appealing to these customers than if we sold 300,000.”

In the end, there are more than enough able and willing young buyers out there to sustain the brand. But to connect, Scion must align itself with where these customers are today—not where their predecessors were 12 years ago.

“We’re still focused on the 18 to 35-year-old buyer,” says Murtha. “But it’s a fluid community. It evolves year after year. We have to evolve, too.”
 
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