Despite the slowed growth in auto retail sales this past year, there is one segment that is continuing to buy – the Millennials. According to research by Dealertrack, the Millennial generation is the fastest-growing auto retail segment, with 35% of all loans originating from this generation. There was also a 49% growth in Millennials’ share for lease contracts from 2012 through June 2016. Millennials are clearly interested in getting into a new vehicle and represent a lucrative segment for those dealerships who can make the connection to this group of car buyers.
Despite claims that this generation prefers to Uber their way around town and are turning away from traditional car ownership, more and more research is proving otherwise. Millennials may not have rushed into car ownership as quickly as past generations, but this is also a generation that is moving at their own pace. They are moving out of home later, getting married later, and also waiting longer to drive. As this group is now coming of age and finding more financial stability, they represent a group more likely to buy a car than any other age group over the coming year.
According to research by Bankrate.com, about 24% of Millennials, aged 18 to 29, said they will buy a car sometime during the next 12 months. According to Bankrate.com analyst Mike Cetera, “The figure slipped to 20% of those between 30 and 49, and then it really falls off the table. Among those aged 50 to 64, for example, only 10% said they were planning to buy a car over the next year.”
So what do millennials want from their car buying experience? It’s important for dealerships to remember that the buying habits of this generation differ from others. They have grown up with access to any number of digital and online resources and are very comfortable turning online for research, looking for recommendations, price comparisons, and so on. While the digital age has changed the shopping habits of most generations to some extent, the millennials are the first age group to grow up with the internet. They are digital natives, where other generations are considered digital immigrants. In fact, they visit an average of 18 sites, including Google, Facebook and other social media before visiting a dealership.
According to a Cars.com 2015 Millennial Outlook study:
- 56% of millennials say digital research had big impact on what to buy, vs. 50% of average new-car shoppers
- 36% of millennials said digital research had a big impact on where to buy, compared to 32% of average new-car shoppers
- 85% of millennials use the Internet for vehicle shopping, and they use more digital sources of information than shoppers 35 and older
In addition to having a strong online presence, it’s important to have a strong social presence. Social networks are ingrained into their life and they will first check their social networks for entertainment versus other platforms such as television. They also don’t want to be marketed to but would rather be engaged with authentic content. So while the high-end, professionally produced content will appeal to other generations, millennials want to engage with a brand that is real and genuine and who is interested in having a conversation.
Millennial shoppers are particularly willing and enjoy sharing content with their friends and social networks through mobile. Millennials will be particularly inclined to share engaging or visual types of content – pictures, videos, contests, and anything that shows your dealership’s personal side and trust-worthiness.
Millennials are also the first mobile generation and 87% have their phones by their side at every second of the day. According to a Placed, Inc. study, millennial shoppers are more likely to use mobile devices for research — and conduct research on multiple device types — than older generations. 65% use a smartphone to research prior to visiting a dealership, compared with 53% of those 35 and older. 85% of millennials use the Internet for vehicle shopping, and they use more digital sources of information than shoppers 35 and older.
Another study commissioned by Edmunds found that millennials use mobile for car shopping activities such as reading vehicle reviews (41% of millennials vs. 20% of all other adults), locating vehicles for sale (34% vs. 20%) and researching vehicle pricing (33% vs. 21%).
Other findings from the study include:
Other noteworthy findings from the study include:
- Millennials decidedly skew toward used cars when they buy. Used car purchases made up 78% of all Millennial car purchases last year, compared to 68% of all car purchases by adults 35 and over. And while Millennials accounted for 39% of all traffic to used car pages on Edmunds.com last year, they made up 58% of mobile traffic to those same pages.
- About 72% of Millennials also said that they have considered buying a hybrid or electric vehicle, and a forward-thinking 66% said that they would consider buying a self-driving vehicle if it hits the market.
- Four out of every five Millennials believe it’s important to integrate their smartphone features into their car, and 62% said that they would pay more money for a WiFi-connected vehicle.
- But in-car technology is not Millennials’ biggest priority. When asked what car features matter most to them, Millennials ranked technology features such as infotainment and Bluetooth well behind price, fuel economy and performance.
- About 70% of recent Millennial car buyers said that they contacted a dealer via text message during the shopping process, compared to just 43% of all other adults.
- About one out of every three Millennials said they used their phones to find contact info for a local dealership, compared to one out of four adults age 35 and over.
- Mobile capabilities are especially useful to Millennials for in-dealership activities, such as using calculators to determine monthly payments and evaluating vehicle options and warranties.
Given this generation’s size and purchasing power, dealerships must evolve traditional marketing techniques to appeal to this generation’s digital, mobile and social mindset.