The auto industry paradigm is shifting, with two ideas leading the movement: transparency and a faster, more efficient transaction. It's no surprise to see these factors become hot topic issues at the same time as the Millenial generation is starting to take over the marketplace.
Millennials' Presence in the Car Market Taking Off
Who remembers how panicked the auto industry got over initial data on Millennials? Early studies showed that they weren't getting their driver's licenses as early, were driving less, and weren't buying cars. The New York Times dubbed it "The End of Car Culture" in 2013.
Now we are seeing just how misplaced much of those worries were.
According to J.D. Power's Power Information Network, Millennials accounted for 28% of new car sales in 2015. Compare that figure to 2010 when their share of the market was a measly 17% despite the fact that they make up roughly 30% of the population. Additionally, Dealertrack data shows that Millennials made up 35% of auto loan originations in 2015.
In retrospect, the majority of Generation Y consumers simply experienced a late start thanks to the recession. Many of them were finishing up college or had just gotten their first jobs when the recession rocked the economy and job market.
Today, it appears that they are ready to enter the car market en masse. It may be another year or so before their spending power surpasses that of Baby Boomers, but that will inevitably happen.
So, if you are sick of all the Millennial chit chat, you'd better get used to it - they are going to be the primary generation the auto industry caters to for some time.
Connecting with Millennial Consumers
Figuring out how to connect with Millennials has jumped to the forefront of auto industry discussions. The reasoning is simple:
- With more than 80 million of them in the U.S., Millennials are the largest age group in American history
- By 2017, they will be spending more than $200 billion annually - the highest spending power of any age group in the U.S.
It's no surprise that marketing as a whole is shifting to a huge competition for Millennial dollars. They are the burgeoning stars of the marketplace. So, how can auto marketers attract them?
It starts with understanding how they consume media and the factors that influence their purchases. You can pick through the various studies and surveys that have tried to identify their shopping habits, but you may find that one often directly contradicts another.
But in our research, two factors seem to universally resonate with Millennials: they want transparency and they want technology to be involved in the purchasing process.
Millennials grew up with the internet and like to stay informed. Expect that they will start their research online and try to figure out as much about pricing as possible. In this day and age, your task is to maximize transparency without hurting profitability. Solutions include showing the consumer the best rates offered by the lenders your store works with, and installing a calculator-like tool on your website that allows consumers to tinker with terms, down payment amounts, and add-ons to see how that affects their payment.
A recent survey from the data analytics firm Annalect found that 52% of Millennials polled said that the technology a brand uses is the most important factor when making a purchase. Gen Yers have a digital sixth sense; a wired world is the only thing that they have ever known. They want things digital, user-friendly, faster, and more convenient. Many of them would rather find a good price online than come in person and haggle for the best price. However you can incorporate technology to speed up and streamline the transaction process, the happier Millennials will be, it seems.
Whether or not a certain tactic will work for your store depends on your area, customer base, and advertising presence. But to better tap the Millennial market, all signs point to an alignment of technology and transparency.
Special Finance Services
Attracting Millennials is a trend that the auto industry will be heavily focused on in the coming years. Those in the know also realize that the subprime segment has very much carved out a role in the marketplace as well. And if you team up with Auto Credit Express, your store can maximize its revenue potential in this area.
Find out how by giving us a call at 888-535-2277 or by filling out our contact form online. We're here to do the heavy lifting for you while you watch your bottom line grow.