Eighteen-year-old John Varner got the first glimpse of his dream car not on TV or in a magazine, but in a video game. The Mission Viejo (Calif.) teen was so impressed by how the Subaru Impreza WRX performed in Gran Turismo, a rally-car racing game for Sony Corp.'s PlayStation, that he rushed down to Frank's Irvine Subaru. Using money from his mother, he placed his order for the $26,000 turbocharged sedan months before it went on sale.
Sound like an odd basis for such an important purchase? Better not consider a career in marketing cars to youngsters, then, because Varner is no fluke. Frank's was so overrun with orders from young buyers who had learned about the WRX from video games, the Internet, or watching European rally racing on cable TV that 80 of the cars were already presold by the time the first vehicle arrived in the showroom last March, recalls the dealership's general manager, Horacio Antonielli. A year later, with Subaru on track to sell 25,000 WRXs in 2002--double its original projection--the car has drawn a new generation to a brand associated with practical cars for baby boomers.
With under-25s such as Varner adding 4 million kids annually to the ranks of drivers, it's little wonder that carmakers are scrambling to develop cars to suit them. Most are priced under $20,000, though a few more upscale vehicles, like the WRX, are showing up as a top choice among youngsters in marketing surveys. And although small-car sales typically generate tiny profits, manufacturers are hoping to get an early hold on the loyalty of a group that will trade up as it gains in affluence.
The influx of young buyers is forcing carmakers to rewrite their rules for product design and marketing. After failing in clumsy efforts to woo them with bizarre styling or appeals to nostalgia, designers are coming up with cars that adapt to youngsters' all-over-the-place lifestyles. Many of these vehicles are highly customizable and leavened with a touch of whimsy. Auto makers are also dialing down the marketing volume, opting for Internet contests or campus test drives over the strained relevance of noisy TV spots featuring extreme skateboarders or mainstream celebrities. Generous financing plans also help, although in many cases it's doting boomer parents who are picking up the tab. "Their parents are paying and they have the money to do it," says Wesley R. Brown of auto consultants Nextrend Inc. in Thousand Oaks, Calif.
Middle-aged auto executives have learned the hard way that winning over the PlayStation generation isn't easy. Retro designs such as Volkswagen's New Beetle and Chrysler's PT Cruiser became boomer icons, but they failed to connect with kids. Ultra-aggressive styling such as Toyota Motor Corp.'s (TM) oddly shaped Echo and General Motors Corp.'s (GM) garish Pontiac Aztek flopped with young buyers, too. Truth is, successes with the twentysomething crowd so far seem to have been partly accidental. Volkswagen's (VLKAY) Jetta, Passat, and Golf GTI caught on with kids who saw them in Europe or on the Internet, while Honda's Civic benefited from the "tuner" crowd's interest in customizing. Says John Wolkonowicz, a partner at the Bulin Group, a Northville (Mich.) generational strategy firm: "It's one thing to say you're going after youth and another to capture them. The sad truth is, they kind of have to find you."
To increase their success rate, auto makers are going all out to develop fresh products. There are reconfigurable wagons such as the Toyota Matrix and Pontiac Vibe, which went on sale in February. There are small crossover sport utilities, such as the car-based Mitsubishi Outlander, due this summer, or high-performance WRX rivals such as the Mitsubishi Lancer EVO 7, scheduled for next January. Honda Motor Co.'s (HMC) Element, which goes on sale in November, is in a class by itself--a boxy, rubber-floored "dorm room on wheels" for the surfer crowd. This spring, BMW will bring its trendy, British-born Mini Cooper back to the U.S. after a 34-year absence. It's promoting the car, starting at $16,850, as "the world's first street-legal Go-Kart." Toyota, whose average customer is now 45, has created an entire boutique brand, Scion, to market cutting-edge vehicles for youth starting in June, 2003.
But there's also risk in trying too hard. Having grown up in a period of rampant consumerism, this generation is turned off by strong come-ons, says Chris Robinson, GM's director for youth marketing. Eric Schumaker, a key designer of Honda's Element, agrees: "If it looks to them like some old guy is trying to sell them something, they'll run for the hills." One alternative: virtual test drives. As Subaru's success with the WRX shows, efforts to cultivate designers of video games can spark awareness among young guys. The new games have near-lifelike images and reaction speeds, based on specs provided by carmakers.
Another myth about young buyers is that they want aggressively styled cars. Forget it, says Jason Dablow, 22, of Costa Mesa, Calif.: "It's hideous," he says of the Aztek. Pontiac took a more conservative approach with the Vibe. Warns Pontiac/GMC marketer Craig Bierley: "Young buyers aren't as far out there as we think they are."
What they really want--surprise--is a vehicle that is practical, fun, and cheap. The $17,000 Pontiac Vibe crams five people into a 14-foot-long car that can be converted into a cargo wagon. Honda designed the tall, square Element as a clubhouse on wheels for guys reluctant to enter adulthood. With an expected price of $16,000 to $20,000, it has rear seats that fold to the sides of the vehicle to open up sleeping space or extra cargo room. Next year, Toyota's bbX, the first vehicle to wear the Scion badge, will come with a high-output digital audio system that transforms it into "a rolling sound studio."
Will all these cars grab the road? Not likely. Even appealing models could be undermined by having to be sold through the same dealers who pitch stodgier vehicles at mom and dad. For all the pitfalls, though, each year brings 4 million new reasons why carmakers have no choice but to give it their best shot. By Joann Muller, with David Welch and Kathleen Kerwin, in Detroit