Study: Generation Y Shoppers Prefer Smaller Cars the Most

The age range of most prospective car buyers is 23 to 47 years old, and a recent study from research firm GfK Automotive shows that out of Americans who intend to buy a car in the next 12 months, more and more consumers are looking at buying a small car.

Of that group, members of Generation Y were most favorable to small cars, with 29 percent of them intending to buy one within the next year, far ahead of all other age groups. The group with the next-highest interest in smaller cars was the pre–baby boomers, with just over one-fifth interested in getting smaller vehicles.

A recent analysis of insurance claims sizes from the Highway Loss Data Institute (HLDI), though, shows there might be some negative insurance and safety implications of going small.

The firm broke down the generational age groups as follows:

—Pre-boomers: born before 1946

—Baby boomers: born between 1946 and 1964

—Generation X: born between 1965 and 1979

—Generation Y: born between 1980 and 1989

Most Car Shoppers Are from Generations X, Y

Generations X and Y make up 63 percent of consumers who plan on buying a car within the next year, according to the GfK study. That’s a marked increase since 2008, when the two generations accounted for 55 percent of consumers intending to purchase a car.

In addition, Generation Y accounted for most of that jump of 8 percentage points in three years, increasing from 16.3 percent in 2008 to 24.3 percent in 2011.

Rankings Show Buyers’ Priorities

As part of the study, consumers from all age groups ranked the more than a dozen vehicle attributes they found important, and Generations X and Y had significantly different tastes than baby boomers and pre–baby boomers.

For example, how “exciting” a vehicle is was the 7th-highest priority for Generation Y, the 13th-highest for Generation X and 21st-highest for older age groups. Meanwhile, the presence of “technologically advanced features” in a car ranks as the 12th-highest consideration for both Generations X and Y but 22nd-highest for other ages.

By contrast, qualities associated with comfort and handling barely make the younger generation’s radar; “Excellent ride,” for example, is near the top of the Baby Boomer’s rankings, at 8th-highest, but sinks to 17th-highest with Gen Y.

However, there were also similarities.

“Excellent gas mileage” ranked around the same areas for all age groups: It was the 13th-highest priority for Generation Y, the 9th-highest for Generation X and 11th-highest for older generations.

A car’s “dependability” mattered to all ages, too, coming in as the top priority for both Generation Y and older age groups and second-highest priority for Generation X, which ranked “proud to own” as its top consideration when purchasing a car.

Generations X and Y are “placing a high priority on things like fun-to-drive, safety, technology-enabled and whether the vehicle makes them feel successful,” GfK senior vice president Jeff Campana said in a statement. “If manufacturers are going to capture the hearts and wallets of this growing generation of younger consumers, they’ll need to develop vehicles that appeal to their tastes and preferences.”

Recent Data Shows Smaller Cars Can Cost Insurers More

The Highway Loss Data Institute (HLDI) released its latest claims data last week, giving a broad indication of how much auto insurance can be for certain makes and models.

The data showed a higher rate of insurance claims in which occupants were injured for smaller cars like the Toyota Yaris, which registered the highest frequency of injury claims. According to the claims data, a Yaris owner has about a 1-in-35 chance of filing a personal injury protection (PIP) claim in a given year, which was about twice as high as the average for all cars.

In fact, out of the 10 cars with the highest PIP claims rates, 7 were small or mini cars like the Yaris.

“We know that in the real world, if all else is equal, a larger, heavier vehicle does a better job protecting occupants than a smaller, lighter one,” the report stated. “These claim frequencies demonstrate that clearly.”

The Mitsubishi Lancer 4WD showed the most expensive insurance claims for lower-cost models under $30,000. The average Lancer claim was 2.5 times above the average for all cars, and they cost insurers about $707 per insured Lancer. Each Lancer collision claim costs about $6,220 on average with 1 in 9 Lancer owners filing such claims in a given year.

When looking at four-door cars overall, mini and small cars had higher average claims costs for nearly every type of coverage when compared with midsize, large and very large models.

While the GfK study didn’t ask respodents to rank how much weight they gave to the potential insurance costs of a car, the HLDI data show that they might be in for an unpleasant surprise.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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