With car sales in the longest slump in a decade, dealers need to get more creative to appeal to more customers.
There is no blanket approach to appeal to everyone, but there are definitely ways to strategize in a more effective way. Specifically, there are different ways to pinpoint how to market to different generations.
We are constantly reading studies and analyses on how Millennials are shopping and doing things differently from other generations and changing industries.
This is no different in the auto industry. Baby Boomers and Gen Xers still buy cars, of course, but Millennials now are a dominant force in the market. There are clear trends in their buying behaviors.
Although it was earlier thought Millennials would kill the car, the generation is not only buying more vehicles now than any other, but they also have distinct shopping behaviors than their older generations.
What Millennials Are Buying
Millennials have different priorities than the Pre-Boomers, Baby Boomers and Gen Xers. Fewer than half of them are married or have children and even less own a home. However, when it comes to cars, 73% of Millennials in 2013 had said they planned to purchase one in the future. The future is now, and they account for 29% of new cars. That’s expected to increase to 40% in 2020.
An interesting tidbit on the kinds of cars Millennials are buying. Millennials, being notoriously better savers than previous generations after being shaped by the Great Recession of the late 2000s, tend to be more conservative and conscious with their money. Fifty-seven percent of Millennials set a budget before going to look at vehicles. As such, their car-buying decisions coincide with getting the best deal and spending less money.
Millennials tend to gravitate toward used cars as they are constrained by affordability. Additionally, the appeal of purchasing a car with incentives and below sticker price is appealing to someone who may not be able to afford a new car just yet.
Millennials’ dealership frustrations tend to be financially related, as they find getting the right price and the financing process to be long and grueling.
Lower-income shoppers as a whole are finding their main pain points at the dealership to be access to credit and loan terms, which leads to purchases being delayed and cars remaining on dealer lots for extended periods.
This coincides with the fact individuals who make less than $75,000 a year tend to wait an additional month to make a car purchase than those who make more than $75,000. This statistic spans across all generations.
Dealers also have a golden opportunity with Gen Xers and Millennials who are purchasing maintenance plans with their cars. These plans are likely for the first one to three years of ownership. They bring customers back to the dealership a few times of year.
These maintenance plans provide dealerships with the opportunity to impress their customers repeatedly, create loyalty and have them keep returning after the maintenance plan expires. That, in turn, will increase fixed-operations and service businesses. Particularly among Millennials, if you build trust with customers across the board, you will have them for life.
How to Sell to Millennials
Regardless of what type of car you are selling to Millennials, dealers should keep the following in mind.
First, Millennials typically come to the dealership knowing exactly what they want and what they are looking for. So don’t waste time trying to change their minds or pitch them something else. Just give them what they want.
Second, be ready for them because, from the moment they walk in, they will have little patience for waiting or inefficiency. Any time they spend idling in the dealership waiting for a salesperson, a test drive or feedback on any aspects of the process, you risk losing them.
Finally, Millennials often are strapped with debt, so they are looking for loans and financing plans that are longer than what is typically offered.
It is an important time at dealerships to be creative with sales operations and attract new and young customers. Grab Millennials as lifetime customers and be creative with how to get them in the door.
By Steve Lind