Until just recently, the auto industry has been struggling badly–from manufacturers right down to dealerships. Between an anemic economy, high gas prices, the growing emphasis on public transit, alternative options and a decreasing interest in cars among younger generations, it’s hard for the auto industry to catch a break.
There was a time when an automobile said a lot about a person. It was a symbol of status and boy was it cool to have a car in high school. Nowadays only 46.3% of potential drivers ages 19 and younger even have a driver’s license. Recent studies have shown that among 31 popular brands not a single automobile company ranks within the top 10 preferred by consumers in the “Millennials” age bracket (born 1981-2000). This generation is exceedingly difficult for auto companies to resonate with, as there seems to be a general disinterest in automobiles these days and little can be said for brand loyalty. With the apparent obstacles in approaching the Millennials it may seem pointless to cater to this age group, but a study done by comScore shows that this segment holds $170 billion in buying power. Also, establishing brand loyalty at a young age could mean a long lasting relationship through the consumer’s car upgrading and servicing life.
So what can be done? Some manufacturers are working to realign their company culture to better understand younger generations in hopes of increasing sales to that segment. This also includes changes at the dealership level endeavoring to make young drivers car purchasing experience more comfortable. Studies have shown that younger drivers tend to respond best to a more hands off sales approach, much like that at an Apple store, where salespeople aren’t pushing you to buy product, but are present if you have questions or need their help. Unfortunately this method doesn’t jive particularly well with commission-based dealerships.
Others appear to be sitting back and waiting for the Millennials to grow up and into their company culture. Perhaps that will happen. Perhaps it won’t. GM has tried to directly face this issue by hiring Scratch, an MTV consulting company, to breath youth into the company. With both culture and manufacturing changes being made within the company it will be interesting to see if the alterations directly influence sales. We are personally excited for the “techno pink” and “lemonade” Chevrolet paint colors to be released by GM.
What are the challenges and possible opportunities we see? Car companies are trying to make cars “cool” again to young drivers. Some are modifying design and persona, others are appealing to deeper values such as sustainability and cost and energy savings. While making a “cool” car or a car with the right features may attract the attention of a young prospect, it won’t necessarily increase interest among the rest of the segment that are disinclined to even get their drivers license. What would increase the interest among these young drivers? By effectively communicating the benefits, importance and ease of owning a car. By placing some emotion behind it, that it’s more than just being cool, it’s having the freedom to go anywhere at anytime. Because let’s face it, the perception by many Millennials is that owning a car can kind of be a drag. Insurance is expensive, gas is expensive, maintenance is expensive, and in some instances even parking is expensive. And that’s all anybody really talks about anymore. The key will be to get the message across that buying a car is a lot more than, well buying a car. So in an age where information is instant and priorities are shifting the auto industry must show consumers it’s worth it.