Small Breakthrough

At the auto industry's annual coming-out party in Detroit last week, carmakers sent a loud message to baby boomers: Get in the backseat. Young, young, young--the word came up over and over again at virtually every one of the North American International Auto Show's glitzy vehicle unveilings. And when the industry's boomer executives weren't making impassioned pleas for attracting younger buyers, they simply turned to the babies themselves, who appeared in person or on MTV-inspired videos, twentysomethings and teeny boppers cooing over the many cars now aimed directly at them. Two of the industry's new youth magnets, the Ford Focus and the Nissan Xterra, were voted car and truck of the year last week--coveted awards issued by North American auto journalists.

Ford, Nissan and other carmakers are focusing their attention on a generation barely old enough to drive, because the 70 million or so echo boomers (born between 1977 and 1994) may grow up to be the most affluent generation ever. But unlike their parents, the echo boomers claim to have no interest in driving elephantine, fuel-swilling sport-utility vehicles and trucks.

That's why carmakers are redefining the long-forgotten small-car segment, for which they are dreaming up new vehicles like DaimlerChrysler's PT Cruiser and the Ford Escape. These latest creations may not be quite as fuel thrifty, but they are vast stylistic improvements over the lackluster econo-boxes of the 1970s and '80s. They have to be. The next generation wants a lot more for its money (or Mom and Dad's money), so today's small cars are bulging with what the trade calls content--everything from power windows to CD players to telescoping steering wheels.

"The car companies haven't spent this kind of money since the baby boomers moved en masse into the market," says Wesley Brown, an auto analyst with Nextrend in Thousand Oaks, Calif. "They know it's much easier to bring new buyers to a brand while they're 16 than it is to start conquering them at 40."

Don't worry, boomers, carmakers are still banking on you to buy those profit-priming monster sport-utes and plushmobiles. In 1998, for instance, about 2 million small cars were sold, a minimally profitable 14% of the total. "The baby boomers are still the lion's share of the market," says Marty Levine, DaimlerChrysler's vice president of Chrysler Plymouth Jeep. That's precisely why DaimlerChrysler has been careful not to refer publicly to its new PT Cruiser--which is built on a small-car chassis and whose voluptuous curves are reminiscent of the cars of the '30s--as a youth attraction.

At the same time, Daimler has so far confined advertising for the Cruiser to the Internet, where it has lined up 250,000 young, prospective buyers. And that list may get longer since the company put a budget $16,000 sticker price on the Cruiser. "You want to attract younger buyers, but you don't want to tag it and say [to boomers], 'This car isn't for you,'" says Levine. Call it "Sell but don't tell." Yet he and other executives know the clock is ticking on the boomers' control over the industry. By 2007 Generations X and Y will account for 40% to 45% of total vehicle sales.