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Millennials have served as the hardest market to crack when it comes to the automotive industry. Dealers are constantly coming up with new tactics to convince post-grads to thirtysomethings to invest in a car.
Dealers frequently attempt to speak the language of “Generation Y” through social media or even by offering low interest rates and cash rebates. Yet they still haven’t cracked the code.
Cars have now become a luxury rather than a commodity. According to an article by The Atlantic, in 2012 the average car was valued at $30,000 and sat in a garage or parking spot for 23 hours a day.
So how and why are millennials avoiding taking the plunge to car ownership? We have a few ideas.
The Uber/Lyft model serves as the biggest competition for taxi cabs, but now they are encroaching on dealership territory. According to an article by Forbes, if it weren’t for rideshares, the car industry would have sold 500,000 more cars in the last decade. In most major U.S. cities, a Lyft or Uber could be at your house within ten minutes, and the fee to get from home to the airport is cheaper than gas money. Some millennials are saving money by using this model to get from A to B, instead of a car. After all, at the end of the month it saves them from paying the expense to fill the tank and that car loan for a car that sits in the lot most of the day anyway. Of course, this does not apply to those who have long commutes or travel for work.
The student loan pile-up is a huge reason why this age group isn’t willing to take on the responsibility of car ownership. In 2014, the average college grad walked into the real world with more than $30,000 in student loans on their shoulders, according to an article on the Wall Street Journal.
That’s about $250 a month in loans-- not much wiggle room to pay a car loan on a entry-level salary. We’ll blame this one on the economy.
The click-through shopping habit is something our millennials have picked up because of constant access to technology. They are jumping from website to website shopping for cars instead of from lot to lot. Cars.com and Autotrader.com make it easy to “ooh and ahh” over cars that they will just put on their wish list for later. Unfortunately, those salesmen tactics don’t translate over the web and they often lose out on selling to this age group because of it.
The zipcar model is the “when you need it” kind of rideshare. Many colleges have started offering zipcar, and it’s been a huge hit. Students can order the zipcar via an app on their iPhone or Android when they need groceries or to visit another part of town with friends. This defeats the need to invest in a car, especially if they are still living on campus and spend most of their time there.
The answer to why millennials aren’t buying cars comes down to one word: Options. With the technology boom, people have been able to make business models that would not have been possible a decade ago.
Though the impact on the car business has been large, it should not keep you as dealers from innovating every day. Tapping into this market could result in a 10% increase in profit, a.k.a., millions of dollars.
Since you know that this generation is searching for cars online, make sure to make your name, number, email and location visible and actionable so you have a better chance of them contacting you. Once they do contact you, if they seem at all interested, ask for that appointment! Make sure not to make them feel like they are obligated to buy anything, though. Just tell them you would love for them to get a hands on experience of the vehicle(s).