The auto industry has catered to baby boomers for 40 years and is largely run by boomers who may not be in touch with the younger generation. Now some enthusiastic predictions don’t seem terribly accurate or well thought out, including the notion that the Gen Y market could turn around the auto industry.

Here at the IMT blog, we’ve never been fans of the “Gen X” and “Gen Y” monikers to describe particular generations. Whose bright idea was it to start so low in the alphabet anyway? Can’t wait to see how “Gen Z” pans out. Anyhow…

We all know that the U.S. auto industry isn’t doing so hot. Not surprisingly, some big-wigs of the industry aren’t going to let multiple thousands of layoffs rain on their revenue generating parade. What is surprising, however, is that some of these enthusiastic predictions don’t seem terribly accurate or well thought out, including the notion that the Gen Y market could turn the auto industry around.

Take Toyota’s new president, Jim Press, for instance. According to Autoblog he thinks that Gen X is having a grand ‘ol time making babies and therefore needs to buy bigger cars to fit everyone comfortably while Gen Y folks are just starting to drive. “All this together adds up to a golden opportunity in the years ahead for auto makers, suppliers and all those who support the industry,” said Press, who included Ford and General Motors in his presentation in Detroit last week. Be sure to check out the colorful commentary that was posted in response to Hess’ statements (hint: most people think the guy is off his rocker).

To put Gen Y into perspective, so-called Gen Y includes nearly 75 million Americans, about the same size as the so-called baby boom generation. Gen Y is a new challenge for the auto industry, which has catered to boomers for 40 years. In addition, the industry is largely run by the boomers who may not be in touch with the younger audience. Further proof that Gen Y is a tough market to tap into is summed up nicely in the same article:

”Historically, the auto industry has made the assumption that young, entry-level buyers want small cars,” says John Wolkonowicz, a senior analyst at forecasting firm Global Insight. ”Usually, this assumption is far from true.” When he asks Gen Y what vehicles they want, he hears Hummers, the Cadillac Escalade and Lincoln Navigator. Large pickups also are, shall we say, big with young new-vehicle buyers.

Call me crazy but it sounds to me like an auto design mishap of epic proportions is brewing. In the meantime, as U.S. automakers continue to scratch their heads and hedge their bets on a fickle generation of young consumers, companies like Honda will continue to turn up the heat on U.S. automakers by building more plants both here and abroad in order to meet rising demand for its popular line of cars and trucks. Here’s how Honda plans to create a path of destruction of Godzilla-like proportions across the globe:

• $400 mil to open a new factory in the United States by 2008, boosting Honda’s annual capacity in North America to 1.6 million vehicles from 1.4 million.
• In Canada, Honda plans to spend $140 mil building a new plant producing 200,000 engines a year from 2008 and employing 340 people.
• The company also aims to double production capacity of its vehicle plant in Brazil by 2008 while a new factory in China is due to open later this year.

Overall, Honda plans to spend some $1.34 bil on new plants and development facilities by 2010 to advance its fuel-efficient vehicles, which are growing more popular as high petroleum prices cool demand for gas-guzzling SUVs.

While Honda probably has Gen Y set in their sights as well, it doesn’t sound like the company is using this generation as a core part of their growth strategy. How can they? Or should they?