LONDON: Brands looking to sell to Generation Y should reconsider their strategy as this group, faced with falling incomes, becomes more likely to invest in experiences than in products.
A new report from market researcher TNS, which explores changing attitudes to car ownership, surveyed over 2,000 UK consumers and found that levels of ownership amongst Generation Y were significantly lower (68%) than amongst Generation X (81%).
It attributed this to falling incomes and the soaring costs of motoring, which meant that car ownership accounted for much bigger proportion of the personal budgets of Generation Y consumers. Almost half of this group (45%) agreed with the statement "owning a car means I have to make other sacrifices".
The report also noted a wide gap in the share of journeys by car attributed by Generation Y (45%) compared with Generation X (64%), which it said pointed to a threat to the future of car use and, accordingly, ownership.
Despite this, car ownership levels remained high amongst Generation Y at 68% and these consumers had positive aspirational attitudes as 62% agreed that "owning a car enhances my lifestyle in an important way".
TNS suggested that this mix of desire and financial constraint meant that younger consumers were likely to look at auto marques that could best serve their needs in ways other than simple ownership.
"Younger consumers are following a new orientation about car use and ownership," said Richard Davies, TNS Director – UK Automotive.
"Deciphering the characteristics of the new model of ownership is an imperative for marketers and businesses wanting to thrive in the automotive marketplace of the future," he added.
Mark Norman, president of Zipcar, the membership-based car rental service, is ahead of the game. "We've turned what seemed like a sacrifice – not owning a car – into something aspirational," he told a recent Marketing Society Conference.
He went on to explain how the company "obsessed" about user experience and how approaches like organising drinks parties with its core customers had "paid rich dividends".
Data sourced from TNS; additional content by Warc staff