Honda discovers it's not so easy getting Generation Y into the Element
04-29-2003, 04:32 AM
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Honda discovers it's not so easy getting Generation Y into the Element
By MARK RECHTIN | Automotive News
LOS ANGELES - Barely four months since barging into the U.S. market, the quirky Honda Element has attracted a younger crowd than the average Honda buyer. In fact, the Element's audience ranks among the youngest of any vehicle in America.
But before you imagine tens of thousands of goateed twentysomethings spilling out of the Element's ultrawide doors and onto America's adventure lands this summer, think again.
The average age of the Element owner so far is a seasoned 41. That's just two years younger than the average Honda buyer.
How can that be?
The discrepancy between Honda's marketing target and the actual buyer illustrates the difficulty automakers have in carving out a starkly younger audience for their products. Buyers of the most "youthful" car out there - the Volkswagen GTI - average 37 years old. So for every 24-year-old owner, there is another who is 50.
The Element's importance to Honda goes beyond the 75,000 U.S. sales it is expected to generate each year. Consumers ages 16 to 25 are not embracing Honda at the same rate as their older siblings or parents did.
While Honda never stated an age goal for the Element buyer, the company made it clear from the start that it was aiming for Generation Y - those born between 1978 and 1995. The company hired kids on skateboards to help set the stage for the vehicle's public unveiling - as the Model X - at the Detroit auto show in 2001. TV commercials pitch the car directly to guys heavily into kayaks, mountain bikes, surfboards and bongos.
And the Element, like Toyota's Scion line, is using a dramatically different product to capture the hearts of active youth. Deliberately polarizing in its styling and interior fitments, the boxy Element features a wipe-down floor and impressive cargo room for its compact size. But those amenities also may be attractive to soccer moms.
The 41-year-old buyer makes the Element the 14th youngest vehicle in the U.S. market - from a field of 253. Twelve other vehicles share that figure - including the Jeep Wrangler, Ford Mustang and Mazda Protege - according to the Power Information Network, an arm of J.D. Power and Associates in Westlake Village, Calif.
Another plus for Honda: 36 percent of Element buyers are under the age of 35. That is a better rate than Honda's previous best, the Honda Civic coupe.
The Element also fares better than the entry-SUV segment. Power Information Network data show that 30 percent of under-35 buyers get entry-level SUVs. Across the entire market, only 27 percent of buyers are under 35 years old.
To be sure, these ages are of vehicle buyers rather than drivers. So there's no easy way to track the number of parents who have footed the bill for their kids' wheels.
But either way, about two-thirds of Element buyers are 36 or older. And the Element has attracted fewer under-25 buyers than the Nissan Xterra, or even the Honda franchise overall.
Still, Honda sees the early results as a success.
"Every month, the demographics are getting younger," says Dan Bonawitz, American Honda vice president of corporate planning and logistics. J.D. Power data show the average age dropping by one year each month that the Element has been on sale.
"More importantly, from the psychographic point of view, it's hitting the lifestyle customer we're aiming for - an active, outdoor type of customer," Bonawitz says.
Another crucial measure: new customers. According to Honda figures, 54 percent of Element buyers are first-time Honda owners.
And they're snapping them up quickly. According to J.D. Power data, days-to-turn - the number of days the average Element spends on a dealer's lot - was 11 days in February and 13 in March.
That compares with 53 days for entry SUVs in general and 35 days for the rest of the Honda lineup.
Bonawitz says Honda has a 27-day supply of the Element as of April 1. Should it maintain its full-production sales rate of March - when 6,234 were sold - Honda will hit its target of 75,000 units a year.
But how much impact the Element is having on the Honda franchise is unclear.
Honda is trying some underground marketing methods, such as having Los Angeles alternative-rock radio station KROQ place a modified Element in its promotional fleet. Station executives declined comment as to what listeners think of the vehicle.
Power Information Network data show that the Element has a two-humped bell curve of buyers. One hump is in the 31- to 35-year-old bracket; another is in the 41-to-45 set. By contrast, the Xterra spikes for 26- to 35-year-olds and drops off sharply from there.
What's more, although the Element is priced from $16,560, including freight charges, and the upscale EX from $19,130, J.D. Power data show initial transaction prices reaching above $21,000. That's typical for new products soon after they enter the market; customers tend to load them up with extra features.
Jerry Powers, dealer principal of West Hills Honda in Bremerton, Wash., near Seattle, sees very few young adults coming in. "They're still buying Civic DXs and certified used cars; the kids can't afford an Element," he says.
"It's the active over-40 crowd buying the Element. I don't think the intended buyer can afford it. It's the kayakers, hikers and mountain bikers who want an SUV without all the glitz and still get the great fuel economy. They see it as a miniature Hummer H2, especially if it's a black one with 20-inch wheels and tires."
Anecdotal observations by this reporter over a four-week period support Powers' view. Several dozen Elements were spotted in the Los Angeles area. They typically were driven by mothers with young children or older men. There was no sign of pierced eyebrows or snowboard racks.
Honda's Bonawitz counters that: "Our development target was a 22-year-old male, but you're certainly not going to sell every one to that person in the real world."
Lincoln Merrihew, an analyst with Compete Automotive in Boston, calls it "the curse of Honda and Toyota."
"They are so practical and functional, they attract people who want that," Merrihew says. "Kids buy coupes because they are not functional or practical, but more for image. The kids are trying to be different so as to alienate. The functionality of the Element may outweigh its styling."
According to Compete Automotive data, the vehicle most cross-shopped with the Element is Honda's own
CR-V - by a large margin. More than 20 percent of Element buyers cross-shopped CR-V. The next vehicle on the Element list was a Toyota RAV4, at just 9.6 percent.
Bonawitz disagrees with those numbers. Honda data show 46 percent of Element buyers didn't consider any other vehicle. While the CR-V was the top vehicle cross-shopped, it was at a 7.8 percent ratio. Every other product fell below the 3 percent mark. Of vehicles traded in, 15 percent are Hondas, and only 3 percent are CR-Vs, Bonawitz says.
Merrihew says younger customers used to do less research on the Element than other vehicles, but that trend has shifted as marketing campaigns have been launched.
"It has taken marketing rather than product itself that is reaching the kids, but the marketing is actually working," Merrihew says. "It's attracting those people Honda wants, and unattracting those they don't."
LOS ANGELES - Barely four months since barging into the U.S. market, the quirky Honda Element has attracted a younger crowd than the average Honda buyer. In fact, the Element's audience ranks among the youngest of any vehicle in America.
But before you imagine tens of thousands of goateed twentysomethings spilling out of the Element's ultrawide doors and onto America's adventure lands this summer, think again.
The average age of the Element owner so far is a seasoned 41. That's just two years younger than the average Honda buyer.
How can that be?
The discrepancy between Honda's marketing target and the actual buyer illustrates the difficulty automakers have in carving out a starkly younger audience for their products. Buyers of the most "youthful" car out there - the Volkswagen GTI - average 37 years old. So for every 24-year-old owner, there is another who is 50.
The Element's importance to Honda goes beyond the 75,000 U.S. sales it is expected to generate each year. Consumers ages 16 to 25 are not embracing Honda at the same rate as their older siblings or parents did.
While Honda never stated an age goal for the Element buyer, the company made it clear from the start that it was aiming for Generation Y - those born between 1978 and 1995. The company hired kids on skateboards to help set the stage for the vehicle's public unveiling - as the Model X - at the Detroit auto show in 2001. TV commercials pitch the car directly to guys heavily into kayaks, mountain bikes, surfboards and bongos.
And the Element, like Toyota's Scion line, is using a dramatically different product to capture the hearts of active youth. Deliberately polarizing in its styling and interior fitments, the boxy Element features a wipe-down floor and impressive cargo room for its compact size. But those amenities also may be attractive to soccer moms.
The 41-year-old buyer makes the Element the 14th youngest vehicle in the U.S. market - from a field of 253. Twelve other vehicles share that figure - including the Jeep Wrangler, Ford Mustang and Mazda Protege - according to the Power Information Network, an arm of J.D. Power and Associates in Westlake Village, Calif.
Another plus for Honda: 36 percent of Element buyers are under the age of 35. That is a better rate than Honda's previous best, the Honda Civic coupe.
The Element also fares better than the entry-SUV segment. Power Information Network data show that 30 percent of under-35 buyers get entry-level SUVs. Across the entire market, only 27 percent of buyers are under 35 years old.
To be sure, these ages are of vehicle buyers rather than drivers. So there's no easy way to track the number of parents who have footed the bill for their kids' wheels.
But either way, about two-thirds of Element buyers are 36 or older. And the Element has attracted fewer under-25 buyers than the Nissan Xterra, or even the Honda franchise overall.
Still, Honda sees the early results as a success.
"Every month, the demographics are getting younger," says Dan Bonawitz, American Honda vice president of corporate planning and logistics. J.D. Power data show the average age dropping by one year each month that the Element has been on sale.
"More importantly, from the psychographic point of view, it's hitting the lifestyle customer we're aiming for - an active, outdoor type of customer," Bonawitz says.
Another crucial measure: new customers. According to Honda figures, 54 percent of Element buyers are first-time Honda owners.
And they're snapping them up quickly. According to J.D. Power data, days-to-turn - the number of days the average Element spends on a dealer's lot - was 11 days in February and 13 in March.
That compares with 53 days for entry SUVs in general and 35 days for the rest of the Honda lineup.
Bonawitz says Honda has a 27-day supply of the Element as of April 1. Should it maintain its full-production sales rate of March - when 6,234 were sold - Honda will hit its target of 75,000 units a year.
But how much impact the Element is having on the Honda franchise is unclear.
Honda is trying some underground marketing methods, such as having Los Angeles alternative-rock radio station KROQ place a modified Element in its promotional fleet. Station executives declined comment as to what listeners think of the vehicle.
Power Information Network data show that the Element has a two-humped bell curve of buyers. One hump is in the 31- to 35-year-old bracket; another is in the 41-to-45 set. By contrast, the Xterra spikes for 26- to 35-year-olds and drops off sharply from there.
What's more, although the Element is priced from $16,560, including freight charges, and the upscale EX from $19,130, J.D. Power data show initial transaction prices reaching above $21,000. That's typical for new products soon after they enter the market; customers tend to load them up with extra features.
Jerry Powers, dealer principal of West Hills Honda in Bremerton, Wash., near Seattle, sees very few young adults coming in. "They're still buying Civic DXs and certified used cars; the kids can't afford an Element," he says.
"It's the active over-40 crowd buying the Element. I don't think the intended buyer can afford it. It's the kayakers, hikers and mountain bikers who want an SUV without all the glitz and still get the great fuel economy. They see it as a miniature Hummer H2, especially if it's a black one with 20-inch wheels and tires."
Anecdotal observations by this reporter over a four-week period support Powers' view. Several dozen Elements were spotted in the Los Angeles area. They typically were driven by mothers with young children or older men. There was no sign of pierced eyebrows or snowboard racks.
Honda's Bonawitz counters that: "Our development target was a 22-year-old male, but you're certainly not going to sell every one to that person in the real world."
Lincoln Merrihew, an analyst with Compete Automotive in Boston, calls it "the curse of Honda and Toyota."
"They are so practical and functional, they attract people who want that," Merrihew says. "Kids buy coupes because they are not functional or practical, but more for image. The kids are trying to be different so as to alienate. The functionality of the Element may outweigh its styling."
According to Compete Automotive data, the vehicle most cross-shopped with the Element is Honda's own
CR-V - by a large margin. More than 20 percent of Element buyers cross-shopped CR-V. The next vehicle on the Element list was a Toyota RAV4, at just 9.6 percent.
Bonawitz disagrees with those numbers. Honda data show 46 percent of Element buyers didn't consider any other vehicle. While the CR-V was the top vehicle cross-shopped, it was at a 7.8 percent ratio. Every other product fell below the 3 percent mark. Of vehicles traded in, 15 percent are Hondas, and only 3 percent are CR-Vs, Bonawitz says.
Merrihew says younger customers used to do less research on the Element than other vehicles, but that trend has shifted as marketing campaigns have been launched.
"It has taken marketing rather than product itself that is reaching the kids, but the marketing is actually working," Merrihew says. "It's attracting those people Honda wants, and unattracting those they don't."
04-29-2003, 07:31 AM
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Why are automakers so concerned about Generation Y? There may be six million Gen Y buyers out there, but wouldn't you think a nice Civic Si or GTI would be enough?
The Element is nice, but who is going to sport that when they are 18? I wouldn't at least.
The Element is nice, but who is going to sport that when they are 18? I wouldn't at least.
04-29-2003, 08:15 AM
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To be sure, these ages are of vehicle buyers rather than drivers. So there's no easy way to track the number of parents who have footed the bill for their kids' wheels.
04-29-2003, 10:44 AM
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One thing this seems to exclude is the driver as opposed to the buyer. My parents have bought cars for their kids... so it may seem like a 50 year old bought an Element buy it may be for his 18 year old son (or 80 year old mother... who knows?)
04-29-2003, 11:19 AM
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The statistics are flawed anyhow. I would say that a fair amount of Element buyers are probably under 30. Some of them probably lack the funds or credit worthiness to buy/finance their car and probably have their parents (especially in the under 24 crowd) buy it for them. So while the actual buyer may be older, the actual user is in their target demographic. Around my university we already have 5 or 6, all driven by college students, but most likely all bought by their 50 yr. old parents.
04-30-2003, 01:35 PM
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Originally posted by MrFatBooty
How many members of Generation Y have enough money to buy a brand new vehicle or good enough credit to finance one? Sure as hell not me.
How many members of Generation Y have enough money to buy a brand new vehicle or good enough credit to finance one? Sure as hell not me.
very true well point. but in my opinion i think the element is also ugly as fawk
04-30-2003, 05:27 PM
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I wish auto makers quit using stupid consumer polls and doing all this research...... just hit the drawing boards and make some good cars. I actually think the Element is hideous. Honda's worst design and concept ever. Marketing has turned the auto world from variety to just plain bland. From a rose garden to a slab of concrete. Now, outside of the Element I don't think it's affected Honda severely. But other manufacurers have fallen into the trap of trying to make all their cars appeal to everybody. Neutral styling, handling, and engine/transmission choices do nothing but make people who are passionate about cars mad! I'm beginning to feel that driving has become a right and not a privelage.
