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3 Auto Dealer New Car Buyers - Boomers, Gen X & Millennials

Posted by Tom Lombardo | Fri, Aug 22, 2014 @ 10:00 AM

The idea that a generation could have an identity all its own didn’t really gather force until 1965 when The Who released their seminal hit My Generation, prompting Time magazine to assert its culture-creation dominance by deciding in 1966 that their “Person of the Year” would be “anyone under twenty-five.” We’ve talked in terms of generations ever since.

What Is a Generation?

The dividing lines between them fluctuate until economists, marketers and the general public come to an agreement. “The Greatest Generation” won World War II and then gave birth to 77 million “Baby Boomers,” the last of whom were born either in 1964 or 1965. “Generation X” came after the Boomers but whereas most generations span twenty years, the powers that be have limited X to only fifteen, which may be one reason it numbers an anemic sixty-five million. 1980 or thereabouts marks the start of what some marketers call “Generation Y” and others call the “Millennials,” probably because if their generation runs the usual twenty years the last one was born at the turn of the century – however, according to Pew Research, certainly one of the zeitgeist monitors making these determinations, no end point to the Millennials has yet been set, so technically their already gargantuan size – 83 million – is still growing.

If you were born in 1980, when the 2008 crisis began you were 28 and fellow Millennials born in 1990 had just graduated from high school. That’s a tough introduction to middle-age and adulthood, which explains why they haven’t been buying many cars and why they bring a different set of demands when they do bring their business to car dealerships.

Millennial Generation Finally Joins the Party

This has just become extremely significant, because J.D. Powers determined that so far this year for the first time Millennials bought more new cars than Generation X. They purchased 26% of them, compared to Generation X’s 24%. (While the Millennials may have the numbers, the Boomers still have the money, and so they accounted for 38% of sales.)

When some analysts were starting to wonder if Lyft and Uber and Zipcar would keep Millennials out of your showroom permanently, seeing them turn up in these numbers comes as quite a relief.  But why are they showing up now? According to an Auto News survey, 80% of Millennials buy a car only when they need one, contrasting sharply with Boomers who, nearly one out of three times, buy cars just because they want them.

What Millennials Want

When a Millennial thinks about what they need, they think primarily in terms of safety and economy, and for the most part they won’t look at a vehicle if it’s not a hybrid. Nine out of ten of them want a vehicle with high MPG and they consider hybrid powertrains a proven, stable technology. 71% of them want free maintenance as part of their purchase plan, perhaps believing that maintenance is all a car ought to need. Following that set of expectations, they are less interested in plug-in hybrids, and only 20% of them would consider an all-electric vehicle, probably because they can’t afford to be early adopters – especially not if they need the car because they are starting a family. Already 40 million of them have children and each day 10,000 Millennial moms give birth, and having a baby onboard will bring a Millennial to you more certainly than anything else.

They enjoy car shopping. Four in five will seriously consider 3.8 vehicles at first and add 2.2 more as they shop. They want their car to be as wired as they are. Three quarters of them want a touchscreen interface and integrated smart phone applications, with more than a third of them willing to pay extra for these features. But they’re in no rush. Generally they won’t make a decision until they have thoroughly researched their purchase online, until they have conferred with friends and family, and until they’re sure they have located the best value.

What Millennials Need

Cutting their teeth on the recession has made this generation fiscally conservative, but thankfully they are upbeat on America’s future. Half of them believe that our country’s best years are still ahead of us. A third of them already feel financially secure and another 53% are confident they will become secure.

They want to be certain about your future, too, and this may be the single most significant fact about Millennials when it comes to closing the deal: Two thirds of them will not buy unless they are confident that their dealer will be there for them for as long as they own their vehicle.

So when they walk into your showroom, two out of three of these new customers want to establish a long-term relationship. It’s not just about the car and its features – it’s about you and the business you run. Here’s the kicker: 90% of them want an extremely efficient purchase process.

Knowing in advance that this customer intends to work with you for years and that once she’s made her decision she wants the purchase process to go smoothly and quickly puts you in a position to prepare to groom the relationship from the outset. One in five Millennials has increased their use of checks over the course of the recession, especially for large purchases, because checks offer the highest rating for bookkeeping accuracy, in keeping with this generation’s fiscal responsibility.

When they tender one to you, they know it’s good. So the last thing you want to do is decline their check erroneously, risking not only the sale but the relationship – and the damage their ire may cause you once they go online to describe their experience.

Best to protect your business’ future with these customers by working with a check processing company that provides the highest approval ratios in the industry, and one that has an entire suite of services specifically designed for car dealerships. Find out more here.

 

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Topics: Auto Dealerships

Written by Tom Lombardo