Gen Y habits force car makers to change gears

SCRAPPED: Toyota has axed its Scion brand, which was aimed at millennials, as the younger generation are buying fewer cars, do not mind getting used cars or are switching to ride-sharing or car-hailing services like Uber.


    Feb 11, 2016

    Gen Y habits force car makers to change gears


    WHEN Toyota looked to the future at the turn of the millennium and aimed its new Scion small-car brand at 20-somethings, it could not have guessed that the brand would be dead after just 12 years.

    In axing the Scion brand last week, the Japanese firm was responding to changing habits of millennials - those born in the 1980s, 1990s and 2000s - who are reshaping the traditional model of car ownership.

    "Surveys we do tell us young buyers are less interested in owning cars," one of those behind the Scion brand said. "They either don't have the financial leeway or they're substituting car ownership with ride-sharing or car-hailing services like Uber."

    Toyota launched the Scion brand hoping that Generation Y-ers would become the grown-up Toyota buyers of tomorrow. It worked, for a while, with the brand selling 173,000 cars in 2006 but sales dropped to just 56,167 last year.

    "I don't think my generation hates cars but the way we look at cars is different now," said Brandon Perez, an 18-year-old student at California Polytechnic State University in San Luis Obispo.

    He also feels young people today are practical and do not mind buying used cars.

    Faced with the demographics of a "sharing economy" and a generation who are still living at home with their parents, juggling debts and marrying later, the auto industry is having to shift gears to respond.

    Also, technology companies such as Apple, Alphabet and Uber are muscling in to control cars of the future.

    In the biggest Detroit-Silicon Valley crossover deal to date, General Motors is investing US$500 million (S$697 million) in Lyft, a privately-owned ride-hailing service in the United States, and plans to develop an on-demand network of self-driving cars.

    Others are responding, too, to the disruptive waves from technology and tech-savvy millennials, who increasingly want their cars to be as connected as their homes - though Paula Poveda, a 19-year-old student in Tallahassee, Florida, thinks today's connectivity acts against the need to own a car.

    "We're more connected than my parents' generation and technology allows us to be in contact with friends constantly. We don't have to go out and see them all the time," she said.

    At the recent Consumer Electronics Show in Las Vegas, Toyota and Ford said they will adopt the same SmartDeviceLink software to link smartphone apps to car dashboard screens and invited other automakers to join them.