For a long time, the future of automotive ownership was looking bleak. “Why Don’t Young Americans Buy Cars?” pondered one article from The Atlantic in 2012, while NPR boldly explained “Why Millennials are Ditching Cars and Redefining Ownership” the following year.
Fast forward one decade though, and the conversation is striking a different tune. Last year, JD Power announced a major shift in the dynamics of the new vehicle buyer audience. Millennials made up the largest share (32%) of new vehicle purchasers in 2020, the first time on record. Fast forward one more year, and the data now shows they are also the largest buyer group of midsize, full size and heavy duty pickup trucks, as well as electric vehicles. In fact, 17 of the top 27 segments now see Millennials as their top buyers.
Certainly part of this can be attributed to a coming of age. The oldest Millennials are now entering their 40s and with that, experiencing many of the life events that strongly correlate with new vehicle purchase and ownership.
What’s more, the pandemic also seems to have brought about a revised perspective on vehicle ownership among younger auto owners. While many were driving less in 2020, their interest in vehicles grew. Eight in ten US Millennials surveyed by YPulse said they appreciated their vehicle more because of COVID, while over six in ten felt their vehicle was more useful to them because of COVID.
So we can -- for a brief moment -- collectively sigh a breath of relief that younger generations are looking more similar to previous ones when it comes to new vehicle ownership. And their purchasing power will likely only continue to expand and grow in the coming years.
But arguably, this may be where the similarities end. Here are three things to consider about the changing dynamics of new vehicle buyers.
Experience is King
Millennials are called the “Experience Generation” for good reason. Many times this refers to this generation’s propensity to value experiences over material items, but we can also think more broadly about the importance of experience to them overall -- including the customer experience. In Salesforce’s recent State of the Connected Customer report for example, 83% surveyed Millennials agreed, “The experience a company provides is as important as its products and services.” Taking that one step further, it will be the experience delivered- not the price paid- that will be a stronger indicator of future loyalty.
And the automotive shopping experience is certainly one area where this shift is already coming to life. Consider this: A recent Meta-commissioned study examined the drivers of dealer loyalty among automotive buyers. Specifically, the strength of auto buyers’ loyalty to a dealer was more strongly linked to the experience they had versus the price they paid. In fact, four out of the top five ‘reasons to buy’ these respondents cited were related to the experience of purchasing the vehicle at the dealership (1).
An important note: It’s not just delivering on the experience itself, but also driving awareness of it among auto customers as a brand-boosting “Why Buy Here” dealer marketing strategy. To a growing audience of auto buyers where the customer experience trumps vehicle price, companies who focus on selling and delivering on the promise of a truly delightful auto shopping experience will gain a significant long term advantage over the competition.
Technology is also King
Undoubtedly, the customer experience is intrinsically linked to e-commerce experiences. Millennials have long been a driving force in the rapid transformation and adoption of digital and mobile shopping. The pandemic then accelerated these behaviors even more. As a result, people have grown increasingly comfortable with digital retail as a whole due to the wide range of products and services they regularly shop for and purchase online.
So it should be no surprise that this audience is already showing a preference to transact in this way within the auto space. Cars.com recently reported that Millennials are twice as likely to shop for and buy a vehicle entirely online, compared to Boomers. A Meta-commissioned Auto eCommerce Study found that nearly seven in ten 18-39 auto intenders respondents believe transacting entirely online is a realistic option for them (2).
Those companies who wait to act on these trends risk falling even further behind. Newly burgeoning social and virtual shopping technologies are continuing to revolutionize the digital shopping experience every day (raise your hand if you’re already preparing for the Metaverse). Companies and brands who meet this moment with enthusiasm and an open mind will be poised to become leaders. They may even help create some of the transformative shopping experiences that will impact the future state of automotive digital retail.
Diverse Values and Expectations for Brands
The US is going through a major cultural transformation, driven by the diverse make-up of today’s younger citizens. Millennials are one of the most racially and ethnically diverse adult populations in U.S. history. By 2030, more than half of Americans under 50 will identify as nonwhite racial or ethnic minority according to projections by the U.S. Census.
From a marketer perspective, this transformation represents a diverse set of values and expectations for brands. Younger audiences feel increasingly empowered to use their purchasing power to choose companies and brands that align with their beliefs and values… and bypass those who don’t.
What does this mean? Today’s marketers must not only actively communicate what they stand for, but also act on those values during day-to-day business -- or else risk blowback. It’s no coincidence that phrases like Green washing and #wokewashing were identified as high growth conversation topics across Facebook and Instagram last year as people turn to social to demand more from brands asking for their business.
Buckle Up
At over 70 million strong, Millennials will continue to be a driving force in the rapid transformation in the future of shopping. Today’s consumers are more empowered than ever before. A multitude of factors will shape who they buy from, what they buy and why they buy it.
And as we’ve hopefully shed some light today, it may not be the usual suspects driving their decision-making. Marketers will need to think differently about how to reach and influence customers where the product and price are not the only important “reasons to buy.”
Additional Sources:
(1) Auto Brand Loyalty Study (Facebook commissioned online study of 1,285 respondents 18+ in the US Current Auto Owners who are likely to consider a new car for their next auto purchase, November 2021)
(2) Auto eCommerce Study (Facebook-commissioned online study of 1,154 Auto Buyers and Intenders ages 18+, United States, August-September 2020).
== AUTHOR BIO ==
Rita Proctor leads client insights for the US Automotive vertical at Facebook, where she helps uncover actionable insights about today’s automotive consumers that support data-driven marketing strategies for clients. Prior to her current role, she was on Facebook’s global automotive sales team for eight years. Before Facebook, Rita was Director, Research and Planning for a digital-out-of-home startup and obtained her Master’s degree from the University of Tennessee. Rita lives in metro Detroit with her husband Gabe and their two sons, ages 4 and 2.