MILLENNIALS ARE FINALLY BUYING CARS.
ARE SELLERS ADAPTING FAST ENOUGH TO CAPTURE THESE NEW CUSTOMERS?
For a while, it seemed that millennials were going to be the car-free generation, between ride sharing, car sharing, better public transportation, and urban living. As it turns out, millennials do want cars, after all. However, automakers and dealers who rely on old marketing techniques to sell their products will quickly find that this generation, and the generation behind them, will not be swayed toward their brands.
A couple members from The Social Capital Agency (SoCap) team recently had the opportunity to head up to Estes Park, CO, and participate in the Rocky Mountain Driving Experience. The two-day event, hosted by the Rocky Mountain Automotive Press, gave members of the media the chance to drive the latest models from the likes of Mercedes, Alfa Romeo, BMW, Mazda, Acura, Honda, Toyota, Chrysler, and several other manufacturers.
One topic that came up again and again in conversations with automotive writers and dealer reps was the numerous challenges of selling to millennials. For example, they are saddled with college debt. Many live in urban centers where cars are not only less necessary, but an outright burden. Plus, they have easy access to ride-sharing apps like Lyft and Uber, while others are beginning to use car-sharing apps like Turo (basically, the AirBnB of cars).
Even as statistics show an increase in car purchasing among millennials, these challenges still exist. Members of this generation are thought to have lower brand loyalty. And when they do pick a brand, they have certain expectations about that company’s social impact.
As persnickety as these damn millennials are, automakers need to figure out a way to engage with them, because they represent the fastest growing segment of buyers. Data from J.D. Power and Associates’ Power Information Network revealed that, in 2016, millennials purchased 4.1 million vehicles, representing nearly one-third (29%) of all sales. By 2020, they are expected to account for 40% of the new-vehicle market, according to a recent article in Automotive News.
Unfortunately, some automakers are going to miss out on the boom, because they fall back to the same old marketing playbook, which basically involves flooding the airwaves with ads showing families on driving trips, big tough guys hauling big loads of stuff, the number of awards given out for initial quality, etc.
There are indeed television ads that target millennials, but the fact that sellers are still relying heavily on TV to sell their products belies an overarching misunderstanding of how to reach millennials.
We at SoCap believe that the very idea of treating millennials as a single entity with similar beliefs, values, and motivations is misguided. If there is any overriding commonality shared among millennials, it is that they don’t like being labeled or grouped in with all of their peers.
The key to effective advertising is finding an emotional pull that will suck people in. But what so many advertisers don’t realize, including those in the automotive industry, is that there is no emotional pull to being a millennial. If anything, there is a negative response to being pigeonholed into some category that assumes everyone from the age of 16 to 36 shares common traits.
Brands that are aware of this have shifted their advertising to focus on lifestyle. But, that is challenging, as well, in light of the fact that there are as many “lifestyles” as there are people. However, there is one lifestyle that is shared by a growing segment of the population: being single.
As of 2015, there were 109,000,000 unmarried people in America, accounting for 45% of all US residents 18 and older, according to the Census Bureau. Nearly 60% of millennials are single. The percentage of single millennials is even higher in metropolitan areas. In Washington, DC, for example, 81% of millennials are unmarried.
Not only are millennials waiting longer to get married (the median age for first marriage is now 30), but according to predictions from Pew Research, 25% of young people may never marry.
This is not to say that all singles share the same traits, life goals, purchasing habits, etc. However, the emotional pull of the single identity is very strong, even if the emotions differ among individuals. Even those who are cohabitating with a significant other are more likely to identify with being single rather than married, because there is still a sense of being unique and independent.
The fact that more and more Americans are choosing to remain single seems to have been missed by many companies and businesses that still treat being single as some kind of affliction. Turn on the television or open a magazine, and many of the advertisements still feature traditional families or couples. Singles are often portrayed as lonely, goofy, unkempt, and typically expressing a strong desire to be dating or married.
Most young people who remain unmarried do so by choice. They are focused on careers, paying off debt, and building financial security. They have money to spend and are willing to do so, but are less attracted to brand names. Instead, they look beyond the name and make buying decisions based on reputation.
For car companies and dealers, this means showcasing features other than third row seats and horsepower. Young buyers, particularly single millennials, are less about flash and more about value. That does not mean cheap. Rather, they want a lot of bang for their buck. They most likely will not find their car through television or print ads. They will go on online, either on their laptop or phone, where they will spend hours performing copious amounts of research.
When researching, they rely less on traditional sources, such as automotive magazines and manufacturers’ websites. According to surveys of millennials, they are 247% more likely to be influenced by blogs or social networking sites. They also lean heavily on user-generated content (i.e., user reviews). In fact, 40% of millennials say they won’t make a car purchase without user reviews.
What does this mean for car sellers? Well, if your car is getting negative feedback from buyers, it is likely to fall off the must-have list for young buyers. Reviews of dealerships can be even more influential. If users love the car, but had a poor customer experience at a specific dealer, millennials will find the car they want elsewhere.
As the number of millennial car buyers continues to grow, it is vital that manufacturers and dealers shift gears, as it were, and understand what is going to get millennials in their cars. Those who stick to the same tired strategies and tactics will be left in the dust.