Automotive News reports that millennials are the fastest growing segment of car buyers, and will represent 40 percent of the new car market by 2020.
What is a Millennial? Millennials are the generation born between 1980-2000. There are over 79 million millennials, which represents more than a quarter of the nation’s population. This generation has been empowered by Google and the internet. If they have a question, they just “Google” it. Information, data, statistics and reviews are just one click away. Today millennials are connected 24/7. In fact, if they lose their phone or don’t have internet access, they are completely lost. According to a survey conducted by YouGov Omnibus, over 50 percent of millennials report that they carry their phone in their hand throughout the day. This first generation of digital natives is different. Brought up on Google, Amazon & Facebook is impacting their affinity for technology and this is shaping how they shop. They are used to instant access to price comparisons, product information and peer reviews.
Millennials’ affinity for technology is also reshaping the retail space. With product information, reviews and price comparisons at their fingertips, millennials are turning to brands that can offer maximum convenience at the lowest cost. When marketing to millennials, a strong brand isn’t enough to lock in a sale. Millennials look beyond the brand to price, convenience, value and the power of social media to influence their decisions.
Why Millennials are influencing change? Millennials are one of the largest generations in history and they are about to move into their prime spending years. Millennials have about $170 billion in purchasing power. Their average annual household income is $71,000. Their main source of information is the internet. Eight out of ten millennials are value seekers. They want to save time and money and they want to shop online. These millennials are demanding, smarter, faster, simpler technology.
How will Millennials shop for a car?
1. Research. Research helps millennials make smarter decisions when buying a car. Millennials will spend an average of 17.6 hours researching a car. Autotrader found that millennials do 95% of their research online and they are blazing the trail for using multi-device usage in car shopping. Millennials will spend 51% of their time researching on 3rd party websites. Their research will be driven by price, convenience, value, recommendations from family and friends including the power of social media forums and reviews, which added up, will all influence their decisions. According to Autotrader, when millennials start shopping, 70% will know little about what vehicle they intend to purchase. Conversely, by the time they get to the dealership, 70% of millennials will have already decided which make and model they are going to buy.
2. Shop by Payment. Millennials prefer to shop by payment. This allows millennials to budget their expenses. Millennials are more likely to focus on monthly payments rather than total vehicle cost, according to Jeff Schuster, senior vice president of forecasting with LMC Automotive. These buying habits are mostly due to the fact that millennials are a subscription-based culture where most of their monthly expenses are repeat costs like rent, Netflix and Spotify.
3. Shop for an Auto Loan Online. When it comes to auto loans, millennials place a high priority on a number of factors, including transparent information, ease of application, speed of response, and a streamlined process. On average, 33% of all auto loan requests through LendingTree come from applicants under 35 years old.
4. Virtual Test Drive. These tech-savvy consumers are not only focused on value and convenience but they want new sleek, in-control, user experiences and a virtual test drive is right up their alley. Virtual test drives are becoming more prevalent as automakers are seeking to lure tech-savvy millennials whose car-shopping habits are digitally-driven. Autotrader found that 88% of shoppers would not buy a car unless they took it for a test drive, according to its latest “Car Buyer of the Future” study. That being said, auto marketers are using VR as a way to lure younger buyers into dealerships to take those test drives with online marketing that goes beyond static words and images and staid promotional videos. “Virtual reality is the sleeping giant that could be another disrupter to significantly improve car shopping, the test drive and brand as well as dealer experiences,” Joe Richards, director of research and market intelligence for Cox Automotive.
5. The Dealership. The Dealership experience is more positive than it is for older shoppers. Isabelle Helms, AutoTrader.com senior director of research and marketing analytics, explains what millennials want from a visit to the dealership is looking for experts to help answer their questions, and to touch and test out the physical car before they make a purchase. Helms said. “That said, millennials want time and space to make the right decision, and will value the salespeople who provide the information they seek in a no-pressure way.” A recent Autotrader study found that 23 percent of millennials aren’t willing to wait 10 minutes for a test drive, 22 percent aren’t willing to wait 20 minutes for paperwork and registration, and 27 percent aren’t willing to wait 20 minutes for financing answers.
6. Ultimately “buy now” online. To emulate Amazon, millennials have been trained by online retailers to expect great information, a fast buying experience, and overnight delivery. Doing the entire car purchasing process online would only make millennials too happy!
AutoCode provides digital automotive retail solutions to companies in the Automotive and Financial space. http://www.autocode.com You can see an example of an AutoCode implementation at http://www.carqualifier.com