Page 36 - On The Move - Volume 17, Issue 1

A Generation That Allegedly Hated Vehicles Now Buys Them Aplenty

Millennials have transitioned from a group originally deemed as uninter- cess and sometimes (29%) accompanying them at the dealership.
ested in vehicle ownership to a generation that’s expected to account for 40% of Nearly half of Millennials felt uncertainty when luxury-car shopping, often
all new vehicle purchases next year. That includes luxury vehicles, pickup trucks saying they were unprepared for certain elements of it, such as trade-ins (41%),
and CUVs/SUVs. Millennials buying vehicles in those three segments go about add-ons (41%) and price negotiations (29%). Chapman says sticker shock can
it in markedly different ways, according to the 2019 CarGurus Buyer Insights play into that. “Most were cramming in last-minute research,” she says of Gen
Report. Y luxury-vehicle buyers. “Ninety-six percent say they were doing that with their
Also known as Generation Y, Millennials make up 22% of the U.S. popula- smartphones on the dealership lot, which I find incredible."
tion and range from age 23 to 38. The older ones “aren’t kids anymore,” says Ali She recommends dealers earn their trust by answering their questions and
Chapman, a customer insights analyst at CarGurus, an online automotive mar- guiding them throughout the process.
ketplace. “Many of them have family, careers and car-buying money.” The latter In contrast, Millennial pickup truck buyers showed greater confidence.
wasn’t always the case, which is how Millennials got an early reputation – much That vehicle segment has grown in recent years, in part because more people
to the horror of the auto industry – as the generation that disdained vehicle in their 20s and 30s are drawn to it. “Millennials are passionate truck buyers,”
ownership. Chapman says. “Seventy-two percent of them view their vehicles as expressions
In retrospect, it wasn’t that they didn’t want cars, it was that they couldn’t of identity.” That compares with 65% for other truck buyers and 33% for other
afford them. Many older Millennials came of age during last decade’s recession Millennial vehicle owners.
that was dark and deep. Many young people then carried heavy student-loan Nearly 70% of young truck buyers strongly prefer a specific brand. They
debts and had trouble finding good jobs. A lot of them couldn’t afford to buy did more research (87%) than other truck buyers (77%) and 62% said they enjoy
cars but drove used ones given to them by their parents. They suffered from browsing various automotive shopping websites for fun. If they are certain what
“financial instability,” Chapman says. They weren’t ripe for the new-car market, truck to buy, they showed iffy-ness as to which dealership to buy from, according
one reason U.S. vehicle sales back then went off a cliff, going from 16.2 million to the CarGurus polling.
units in 2007 to 10.6 million in 2009. (In contrast, the industry has seen 17 Whereas trust in the dealership ranked No.1 with Millennial luxury-car
million-plus sales in the past four years.) buyers, it was at the bottom of the list for Millennial truck buyers. At the top
Today, the average U.S. Millennial annually earns $69,000. That exceeds for them was initial asking price. Buyer’s remorse is rare for that group: 86% of
the overall average of $61,000, but isn’t as much as Boomers and Gen X aver- polled Gen Y truck buyers said they got a great deal. The best way for dealers to
age. connect with them is through strong digital marketing, making sure messaging
As first-time luxury vehicle buyers, Millennials show distinctive traits, and information stays consistent, Chapman says.
some of them rooted in anxiety, Chapman says during a Wards webinar entitled, About half of the Millennials switching into CUVs and SUVs saw their ve-
“Data Reveals How Millennials Are Changing Key Car-Buying Segments.” hicles in utilitarian ways, mainly as a means to get from point A to point B. Yet,
The average first-time Gen Y luxury vehicle buyer is age 29 and mostly “they are still excited about getting something new and fresh,” Chapman says,
male (81%), according to the polling. “At 29, they are in a funny space,” adding that they are more likely to switch out of a car. Nearly 40% of them had
Chapman says. “Many of them have kids of their own, but they identify owned a car for six years or longer. “They are more likely to be replacing an un-
their parents as playing key roles” in advising them on the buying pro- suitable vehicle.” Seven of 10 are certain they want a utility vehicle, and 60% are
certain about the approximate price they’re willing to pay. They are less certain
about make, model and dealership.
Many Millennials buying utility vehicles for the first time are receptive to
advice, especially from experts (62%) but also peers (49%). When dealing with
this group, Chapman recommends dealers give ground on price and stay flexi-
ble elsewhere. “Those switching into SUVs and CUVs are certain on two things:
Type (of vehicle) and monthly payments,” she says. “Everything else is fair
game.”
Source: Wards Auto

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