News, Insights and Best Practices for Manufacturing in Mexico

Automakers have to change processes to appeal to millennials

14 Aug 2013

Category: Automotive Manufacturing

As baby boomers get older, automakers have to focus their attention on a younger crowd, more specifically, consumers aged 18-34 who are commonly referred to as millennials. These Americans have been less willing to buy cars than their elders as the economic recession combined with student loan debt, growing fuel costs and more integrated public transportation systems have decreased the need for an automobile, reported Bloomberg.

However, automakers are not ready to give up on millennials​, as the age group is slowly accounting for a higher percentage of the U.S. new car market. The Associated Press referenced data from the Polk auto research firm, which revealed the figure grew from 10.5 percent in 2011 to 12.3 percent during the past year. By targeting a younger demographic, automakers are going to be forced to alter their car designs to meet the needs of millenials.

"It may be a long-term endeavor to appeal to younger drivers because a lot can't afford new vehicles now, but they will a few years down the road," Ed Kim, an industry analyst at AutoPacific, told Bloomberg.

Cheaper cars will appeal to young drivers
If automakers want to be able to capitalize on millennials, they are going to have to create cars that are less expensive, but just as luxurious and comfortable as their current models. By partnering with shelter companies in Mexico, car producers will be able to save money on their supply chains and manufacture automobiles in a cost-effective manner, allowing them to sell at a lower price point.

In a video recently released by General Motors Chief Economist Mustafa Mohatarem, he discussed how cars that are smaller, more convenient for urban dwellers, and less expensive will be more popular with millennials. These cheaper models may help automotive manufacturers to get customers to begin purchasing cars once again.

"It's not a permanent withdraw from the market, it's more of a delay," Mohatarem said. 

Shelter companies can speed up production
Many U.S. automotive manufacturers have realized the potential of shelter companies in Mexico. These firms are much closer than suppliers in other corners of the globe, and are able to benefit from low manufacturing costs and advantageous exchange rates.

For example, automakers such as Nissan, Honda, Toyota and GM have all established a presence in Mexico, while other companies like Volkswagen and BMW are pouring huge amounts of funding into facilities across the border. With costs in China beginning to mount, there is no reason why offshore shelter companies shouldn't be on the minds of decision-makers at automakers who are trying to appeal to a younger demographic.

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