It's almost a rite of passage for teenagers to pass their written and driving tests and get the keys to their first automobile. For parents and the rest of us drivers, it can be the main reason we have insurance in the first place!
It's been a long time since I was a teenager, but I can still recall my first year behind the wheel, and it was an "interesting" experience to say the least, especially growing up in the suburbs of Los Angeles. Parents want the best for their kids, but what they're often focused on for their teens' first cars is something that will be as safe and reliable as possible, and that will cost as little as possible from an insurance perspective. In addition, fuel economy often comes into play with a teen's first car.
With these factors in mind, Consumer Reports put together its list of the five best used cars for teen drivers which we're going to take a closer look at today. However, before we dive into what these five cars are and how they could positively affect the manufacturers behind these vehicles, let's first take a step back and examine what advantages and disadvantages exist in automakers trying to target teens in the first place.
Why automakers target teens in the first place
Possibly the biggest advantage to automakers targeting teens is that they are the companies' future audience. Reaching them at a young age could help ingrain a level of brand loyalty that can drive sales down the road. For automakers, that begins with leaving a positive impression on teenagers and reaching them through traditional methods such as advertising, as well as stepping onto a turf that they're familiar with, such as social media.
Nissan (NASDAQOTH: NSANY ) , for example, sponsored the addition of its all-electric Leaf to versions of Electronic Arts' "SimCity". Based on game play, digital inhabitants of a city get increased happiness levels each time they add charging stations and a Leaf to their imaginary city. The goal for Nissan is to reach younger drivers who may not be able to afford pricier electric vehicles now, but who may be able to in the future. Gen-Y is also particularly interested in environmental concerns, so Nissan's all-electric Leaf hits the green points of being a better alternative than a fossil fuel burning car.
Automaker Ford (NYSE: F ) , on the other hand, is attempting to reach teens and young adults by appealing to their more subdued and practical natures. This means producing fuel-efficient and small cars which allow teens and young adults to navigate big cities for minimal cost. As noted by Bloomberg, Ford has attempted to heighten awareness of its Fiesta by allowing some 100 young adults to drive the car for eight months and act as ambassadors for the brand. Relating with teens on their level is often a smart way to garner future sales.
According to a Polk car brand loyalty poll conducted in the first quarter of 2013, a whopping 65.1% of all respondents who purchased a Ford had stayed within the Ford family with their next purchase. By contrast, the national average was just 51.5%, meaning that Ford is obviously doing something right when it comes to relating to its consumers, young and old.
Another factor to keep in mind is that these less-expensive new vehicles often transform into affordable used vehicles which is what the Consumer Reports study examined. Let's face it, many teens aren't going to get a brand-new vehicle, so hitting an attractive price point in both the new and the used markets can go a long way to coercing young buyers -- and the parents of young buyers -- to choose a specific brand.
Of course, there's a downside to courting teen drivers as well -- that being the low margins often associated with less expensive vehicles. In a perfect world automakers are selling each and every mid- and high-priced vehicle they produce since they deliver the beefiest margins. But, automakers don't live in a perfect world. They need to build vehicles that cater to a younger audience in order to drive future sales. In short, if automakers shift too much effort to selling lower priced cars targeted at teens and young adults, it could negatively impact margins and hurt their profits, at least over the near term.
The five best user cars for teens
Now that we have a better idea of why automakers gear at least some of their production toward teens, and what disadvantages exist to that approach, let's have a closer look at what five cars Consumer Reports considers to be the best used cars for teen drivers. For its approach, Consumer Reports focused on the combination of safety, reliability, and ease of use for experienced drivers, and pinpointed used vehicles generally priced below $15,000.
As Consumer Reports noted in its study, General Motors' (NYSE: GM ) Chevy Malibu ranked for its electronic stability control, or ESC, in most models since 2008 and its reasonable fuel-efficiency.
More importantly, sales of the vehicle showed few signs of slowing even during the recession, speaking to its reliability and overall attractive pricing. Hitting a low of 128,312 units sold in 2007, sales rose to as high a 210,951 units in 2012.
Chevy took an even more aggressive approach with its 2014 Malibu to appeal to the cost-conscious and environmentally friendly group of teens and parents by adding a stop/start feature which will add to improved fuel efficiency. All told, momentum for the Malibu shows little sign of slowing, which should translate well for Chevy and parent General Motors.
The Hyundai (NASDAQOTH: HYMLF ) Sonata is included on this list thanks to its ESC and curtain air bags, which Consumer Reports points out are standard in models dating back to 2008, as well as the model's impressive fuel economy.
However, unlike the Chevy Malibu, the Sonata has struggled recently; sales dipped 11.7% in 2013 from the prior year to just north of 200,000 units. Much of that slip has to do with the fact that it hadn't been redesigned since 2009, but that changed this week with Hyundai unveiling its all-new Sonata at the New York International Auto Show, which Foolish senior auto analyst John Rosevear was able to witness firsthand.
Even though Sonata buyers are looking for basic things like fuel efficiency and safety, consumers, including teens, also want some degree of style differentiation. Hyundai hopes that it's redesigned Sonata will help boost annual sales to approximately 228,000 units in 2014, which would represent a gain of 12%. Given its successful past I believe this to be achievable, but it remains to be seen if the new design provides enough differentiation from its competitors to entice Gen-Y and teens to take the plunge.
Mazda finds its way onto this list due to good fuel economy, a roomy interior, and for being "fun to drive."
Yet, in spite of Consumer Reports' kind words, sales of the latest generation of the Mazda 6 have been anything but "fun" for investors. A number of automakers saw their sales dip following the recession, but the Mazda 6 saw no rebound in its sales figures despite introducing a redesigned model in 2009. Only recently with its newer 2014 redesign have sales even remotely begun to tick higher, though they're still well below their 2004 peak.
Also working against the Mazda 6 is its low brand loyalty, which according to Polk's household loyalty survey in the first quarter of 2013 stood at just 37%, the lowest among all automakers polled. You'd think with its sleek styling that it would be specifically targeted at a younger audience, yet it's apparently not making enough of an impression to garner repeat buyers. This is a potentially dangerous scenario for Mazda that could result in the company losing market share down the road as these younger drivers age, get better jobs, and look to move into mid- and upper-tier vehicles.
Ford Focus sedan
Focus finds its way easily onto this list for its no-frills reliability, good fuel economy, and the addition of ESC in 2009, which became standard by 2010.
Of this list of used cars for teens perhaps none stands out as a stronger driver of loyalty than the Focus sedan. Part of that has to do with the Focus being the best-selling car in the world once again in 2013, which speaks to Ford's ability to obviously hit on consumers' wants and needs. Where the Focus really stands out, though, is in its size, price, and reliability.
As editor-in-chief for AOL Autos David Kiley noted last year, higher gas prices create an allure for the consumer to choose smaller fuel-efficient vehicles, which the Focus embodies. With well over 230,000 units moved over the past two years in the U.S., and a freshly designed Focus being debuted for 2015, expect Ford's momentum with entry-level consumers to grow.
Lastly, the report highlighted Volkswagen's (NASDAQOTH: VLKAY ) Jetta, specifically the 2009 model, as it presented above average horsepower, good gas mileage, a roomy interior, was reliable, and had standard ESC.
Like the Focus, sales of Volkswagen's Jetta have been pretty strong over the past three years, hitting their peak in 2011 with 177,360 units sold in the U.S. Volkswagen has certainly focused its efforts on pushing styling that will appeal to a younger audience as well as introducing options which have the potential to dramatically improve fuel efficiency, including cleaner-burning diesel engines.
Earlier this week VW unveiled its slightly updated Jetta which features some mildly aggressive add-ons which may speak to younger drivers such as a new front fascia and bumper, as well as more interior color and chrome options. It's a bit early to tell if the Jetta will able to keep pace with the Focus and other similar sedans which have undergone a complete facelift for 2015, but it's hard to imagine Jetta sales falling too far behind the competition given its reliability and range of choice for the consumer.
This company is turning the tables on OPEC
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool free report reveals the company we're calling OPEC's worst nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!