Over the past several years, there has been much speculation about how millennials will affect and change the auto industry.
Today, young people looking to purchase vehicles use a variety of different tools to make their decision, all of which are right at their fingertips. As the millennial generation starts to settle down and enter their prime spending years, it’s important to keep in mind their unique spending habits and life experiences when they enter the showroom looking to buy their first car.
According to a study conducted in March 2016 by J.D. Power & Associates’ Power Information Network, millennials are forecasted to be the fastest growing demographic of car buyers and will represent around 40 per cent of the new car market by 2020.
Last year in Canada, 22% of millennials bought a car according to a national 1,100-person study run by millennial engagement firm Intercept Group. “They are surrounded by personalized offerings. From Amazon to Spotify, their preferences and habits dictate their consumption experience. This has fundamentally changed their expectations and their buying behaviours,” says Andrew Au, Intercept Group President.
While buying your first car was a rite of passage into adulthood with previous generations, it appears that the millennial generation has delayed that process to focus on other priorities in their lives – whether that be paying off college debt or choosing to move to big cities where the costs of living are higher.
This particular generation’s spending habits are also vastly different from what we’ve ever seen before. Today’s young people are very subscription-based and are willing to pay repeat costs as part of their monthly expenses (like Netflix and Apple Music, for example).
This is also a generation of sharing – while car rentals have always been around, car share companies like Evo and Car2Go are quickly becoming more popular, especially in urban cities, where people can simply leave the vehicle for the next person to use.
But as millennials begin to settle down and start families, many are still seeing the need to own their own vehicle, regardless of these spending habits.
A study from 2017 titled Accel + Qualtrics Millennial Study saw that 80 per cent of millennials today own their own vehicles, and that 75 per cent of the millennials who don’t own a car aspire to do so in the future.
As this age cohort starts to embark on new life stages, factors like starting a family and professional connectivity are leading millennials to still purchase vehicles, including larger vehicles like SUVs.
But how do we engage with a younger, tech-savvy demographic in the dealership?
Millennials are coming to dealerships with a pretty good idea of what they’re looking for. Numbers from Cox Automotive’s AutoTrader U.S. show that millennials spend more than 17.6 hours researching online before visiting a dealership.
“The role of the dealership has changed. It’s no longer about information. It’s about experience. We see the rise of experiential-focused dealerships that centre on lifestyle and new technology to engage the millennial buyer,” says Au.
Seeing a vehicle online and seeing it in-person are two completely different experiences. As always, it’s important to create a stress-free experience and find something that fits each buyer’s unique lifestyle and budget.
Armed with the internet on their phones, millennials can research and compare models before ever setting foot into the dealership, but there are many things (like financing options) that are easier to explain in-person. For dealerships, it’s important to provide experiences that the internet cannot. Experiences such as excellent service and the opportunity to test drive are still exceedingly important in the digital age.
Things like in-vehicle technology than can integrate with smartphones rank high, and offering demonstrations to show all these features can influence a potential buyer’s decision.
And knowing millennials’ reliance on internet research, it’s also worthwhile to monitor all social media pages daily for any questions that may be directed through Facebook or Twitter, and provide timely responses.
For many in today’s “digitally native generation,” a car is still an extremely important investment. They aren’t buying cars as early as some of us might have decades ago, but they’re still buying them nevertheless.
Blair Qualey is President and CEO of the New Car Dealers Association of BC. You can email him at [email protected].
