How Millennials’ buying habits change the auto industry
- September 23, 2018
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After more than a century on the road, the Americans are changing the way they drive. As of April 2016, the Millennials are the largest living population in the United States and they will make a huge impact on the auto industry. If you want your dealership to prosper, you need to get to know your target group well.
Millennials today are people aged roughly 24 to 37, and naturally, they continue to age. This means that, as they accept leadership roles and their once solo lives now start revolving around home and family obligations, their needs also change so they will need your services – buying and maintaining cars.
However, if your dealership is still dreaded by the thought of them as same ol’ car shoppers, things need to change – fast. Here are some frequent delusions about Millennials and their car buying habits.
Misconceptions about Millennials
Many dealerships still falsely believe that Millennials arenot buying cars. This had been a fact when after 2008 and the Great Recession the Generation Y indeed could not afford them, but things are now changing. Salespersons today no longer fear the word ’Millennial’ – and why should they? The Millennials bought4 million cars and trucks in the US in 2015, according to Power Information Network study conducted byJD Power.
As opposed to Generation X, which borrowed cars in a greater percentage at the same age, Millennials today love owning cars, even new vehicles.29% of new vehiclesare bought by Millennials, and by 2020 they are expected to be responsible for 40% of new car sales (source:JD Power). The reason for this might be that the interest was higher back in the day when Gen Xers were 20 to 30 years old, whereas today Gen Y can get a seven-year loan at the lower rate, as opposed to five-year loans of their older generation not to mention today’s short-term low lease payment options.
Even though this generation may still look slightly foolish to the older generations, reckless or even hasty –Millennials are not what they seem. In fact, theyplan outtheir activities, future, and money, so whenever they invest, they have previously made a good calculation thereof.
They are delaying the purchase decision, but not foregoing it completely.JD Poweralso found that Millennials just need some more time to think about the car purchase than Baby Boomers – Millennials think for an average of 19.9 weeks as opposed to Baby Boomers who would give it a thought for 15.7 weeks.
How Millennials remodel the car industry
1. They drive more.
Fifteen or ten years ago, the first wave of Millennials was still in college or paying off student debt or still without a decent job to afford to pay for a home or a vehicle. However, things have changed in the meantime so now they are taking on responsibility and finding jobs that suit their lifestyles and getting married and moving to the suburbs.
Even thoughUberbrought quite a revolution to how Millennials travel and commute, they are the generation that drives more miles than Baby Boomers. In fact, anMTVstudy found that they drive 72% more than Baby Boomers and 18% more than Gen X.
2. Practical vehicles.
Surprisingly, Millennials do not quite fancy sports cars, but rather go for something more practical. And this comes naturally since their careers start to develop gradually and they look for things that will not complicate their lives, which are already complicated enough.
LA Timesreports that when they move to the suburbs, they do not see the car as a status symbol (like Baby Boomers used to). Rather, its utilitarian use comes upfront. They are open to any brand and, asYpulsesurvey showed – they “view cars as a practical need instead of an emotional want.” They want reliable and safe compact or mid-sized vehicles – to take them from point A to point B: usually from home to work.
3. Unique experiences.
Millennials are changing even the test drive. They want to get a complete overview of their experience and they want to see how the car would fit into their daily schedule. This is why many Millennials no longer want just an hour-long test drive, but want to extend it to a whole day.
We see a lot of dealerships adjusting to this trend, such asToyotadealers, allowing their young customers to get a great feel of the car and take them home for a drive, or to get to work, or even to the open road or the mountains to test it in different weather conditions.
4. Truly social.
Millennials do everything differently. This generation entered the grown-up world in the age of Facebook, Twitter and reality TV – which shaped their image of reality significantly. When they decide to purchase a car – Millennials do it via social networks. They show it to their friends and connections who also may want to own one, too.
It is no wonder, then, that many car dealerships today opt for promoting their vehicles via Facebook, Instagram or Snapchat ads, thus provoking social chatter and attracting attention to their products and services.
Social networks, in turn, give a great insight of the market needs and bring the true meaning to the words ‘social listening’ (source:Brandwatch). Heck, just see what happened toTesla’s Model 3 pre orderwhich generated $10-billion in customer deposits within 36 hours.