It would be an understatement to say that we’ve spent a little bit of time thinking and talking about the challenges automakers are facing with converting Millennials aged 16-32 into new car buyers. It’s daunting.
The job market: lagging. Student debt: all-time highs. Urbanism, environmentalism and individualism: in full swing. But while my generation’s been dealt a tough hand, we’re emerging as a consumer market that is well-informed, straightforward to deal with and willing to pay a premium for great products.
This blog post has not been easy to write. Many hours have been spent at the Gardner offices discussing trends, weighing logical variables like Total Cost of Ownership or financing strategies. We’ve been thinking about marketing approaches that appeal to the emotional aspect of a car purchase. With so many factors involved, and with so much at stake, there’s no doubt that this will be a topic that will continue to be discussed in board rooms throughout the auto industry. I wouldn’t consider this the entire picture, just slices of the story and some action items for the industry to consider.
The Atlantic has found some easy publicity by running an article asking if we’re the “Cheapest Generation.” In the article, the author postulates that we’re not taking part in the economy because we aren’t spending money on new cars or signing mortgages. The truth is, among my peer group, our big ticket purchases are incredibly calculated. We’re not cheap, we’re thrifty, and we’re more wary than previous generations of paying for things on credit. We’re out there chasing the greater good at a non-profit, supplementing income with multiple positions, or pursuing higher pay by accruing skills in multiple industries. The average Millennial will work an average of 6.3 jobs between the ages of 18 and 25. Now this isn’t much more than the average baby boomer (5.5 during their day), but the real wages earned leave less discretionary income than previous generations.
So we’re frugal, and as a result of watching the housing crisis unfurl, we’re afraid of commitment. But as the job market finally begins to offer more reliable employment, the desire to be free of multi-year car loans will be tempered by the Total Cost of Ownership equation.
It’s going to be up to the dealerships to help us understand these numbers. One thing that appeals to me is free scheduled maintenance and multi-year warranties. This can be coupled with a reminder that while a used car may be cheaper in the short run, there is a much higher risk of an unscheduled necessary repair that can decimate one’s budget.
A lot of effort is expended trying to convince the young consumer to want a certain vehicle. But as soon as the justification arguments start in our head, we end up talking ourselves out of buying what we want because we don’t realize that it’s actually possible to finance the vehicle that we desire. We spend good money on our tech gadgets, locally-sourced food options and craft beer, but we can’t seem to pull the trigger on a great product that can last us for over a decade. Automakers, dealerships and ad agencies should think hard about how to communicate that car ownership is a practical tool for living: it expands your possible job network, enables thrifty travel and provides access to actual face-to-face time with your social network.
To many of us, the current crop of cars just isn’t compelling enough to get our feet on the ground and behind the wheel for a test drive. It’s not that the lust for the road is completely gone from my generation, but the vehicles of the past two decades have lost a certain joie de vivre, whether by regulation, segmentation, or fear of risk. What modern vehicles speak to the quirky individualism and self-branding that run rampant amongst us Gen Y’ers? Wherefore art thou ill-conceived but at-least-not-neutral-feeling Chevrolet Avalanche? Perhaps the Hyundai Veloster has raised the bar, filling the shoes (and then-some) of the AMC Gremlin.
The Compact Pickup is one segment with a dearth of choice. Blame it on whatever you’d like — the antiquated Chicken Tax keeping costs high, NHTSA standards or out-of-touch coastal ad execs —but the market yearns for another Isuzu P’up or access to the Toyota Hilux diesel platform.
The goal needn’t be to sell new cars to new drivers. Try to sell the idea of a LIFE UPGRADE to existing drivers. Heck, most of our first cars are hand-me-downs or beaters that were purchased for under $5,000. Unfortunately, automakers suffer from their own success: these are 10-year-old vehicles lasting upwards of 200,000 miles.
When it’s finally time to replace our first car (oh, the nostalgia…), we want something that better fits our lifestyle. For those that LOVE DRIVING, there are great options out there: Ford Focus ST, Scion FR-S/Subaru BRZ, or Volkswagen’s GTI. But this is a segment that is likely to spend a lot on a new car anyway. Focus on the psychographics, as opposed to the demographics and key in on the “I NEED THAT” reactions. Keep trying things like the Mazda CX-5 Grand Touring and Subaru Crosstrek. Revisit why VW sold so many black Jettas in the mid-2000s to my generation, and then think about where that segment is spending their money this year. They can’t all be saving up for an Audis and BMWs.
With such a big investment, we want to feel taken care of, inspired and capable of more than we ever imagined. We want a car that can grow with us, change to meet our needs and make a strong statement. We want to feel attached, maybe even a little bit enamored. We’ll name our car after a ‘90s TV show, makeup a clever #hashtag and cry just a little bit the first time we find a scratch from some jerk who parallel parked into our bumper. Apathy is a thing of the past, help us own our future.