Despite reports to the contrary, millennials love cars, but when, what and how they buy them is different than earlier generations.
Reports of the death of the American love affair with cars have been greatly exaggerated, especially when it comes to young Millennial buyers, according to a new report – but what Gen Y wants, and how they go car shopping, is very different from prior generations.
Young shoppers, often saddled with debt, are looking for smaller, cheaper vehicles – and they’re far more likely to do their research online, often with their smartphones, according to new research by AutoTrader, the parent company of several major automotive web services.
“You hear a lot that this generation doesn’t care about cars,” said Isabelle Helms, AutoTrader’s vice president of research, during an appearance at the Detroit Automotive Press Association. “They do care about cars.”
But as with many things in their lives, such as buying homes, getting married and starting families, Millennials “are doing these things later. They’re delaying them.”
The study was based on interviews with 1,900 new and used car shoppers of all ages, comparing and contrasting what Gen Y is looking for and how they get what they want.
Automakers see Millennials as the answer to the aging Baby Boom generation. There are about 74 million of them and they currently account for about 12% of the U.S. new car market, 18% of the used. But by 2020, “they will account for 40% of new car purchases,” noted Helms, adding that compared with prior generations, “they are very different.”
Going into the car buying process, Millennials are notably less likely to have any idea what sort of vehicle they want. By the time they walk into a showroom, however, they are far more likely to have a specific model and brand in mind.
“They enter the market with a lot of questions,” said Helms, stressing that how Millennials get answers is notably different than for prior generations. For one thing, the study reinforced the idea that “Traditional media as an influencer is aging out.
Where two-thirds of car shoppers overall see newspapers as “helpful” in the car buying process, the number flips, two-thirds of Millennials saying papers are “not helpful.”
The Internet has become increasingly important for shoppers of all ages, but where 79% of the respondents overall said they went online during at least some part of the buying process, that jumped to a full 95% among Millennials. They also go to more websites – an average 10.1 compared to 8.8% for car shoppers overall.
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One of the biggest surprises revealed by the AutoTrader survey was the lack of influence social media websites, such as Facebook have on the process of choosing a new car. While automakers and auto dealers may be able to build “relationships” with shoppers after they buy, the study found that only 5% of Millennials are influenced in their choice of a car by what they find in social media. For U.S. shoppers overall, it was a mere 1%.
The study also found that “mobile rules,” according to Helms, who said that fully half of all Millennials rely on their smartphones during the car buying process, though the trend is spreading to older generations, as well. Automakers who want to stand out should adopt a “mobile-first mentality,” she suggested.
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Asked what sort of vehicles the new generation wants to buy, Helms said the research shows “They’re big on small,” as well as into alternative-powered vehicles. But price is a big factor, influenced by economic realities. Millennials face higher levels of unemployment, lower pay – and the likelihood of greater college debts.
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They’re also more likely to live in cities, and may be somewhat less interested in owning a car – for now, though other research has suggested that as they begin to age and start families, in many cases moving back to the suburbs, their tastes shift to reflect those of Gen-X and Boomers.
And that would suggest they’ll want bigger, more powerful and luxurious vehicles when they can afford to spend more. But the way Millennials go shopping, the research suggests, is likely a permanent shift.