Millennials are Changing Automotive Retailing and Lending. Are you Ready?
They are the biggest generational group in U.S. history: 92 million strong. They’re generally savvy, smart and, well, slightly different than everyone else.
The fact is that Millennials – those who were born between 1980 and 2000 – are different, thanks to the world that welcomed them. Fast paced, full of shifts and innovation, this generation grew up in a world where the reality of change was the only thing they could really count on. When you grow up expecting things to change rapidly, you learn how to adjust on the fly, make decisions and not waste time attempting to wade through processes that don’t work for you.
Like car sales and financing.
Where previous generations worked within the system, or attempted gradual change, Millennials are more likely to just walk away and accomplish their goals another way. That includes the very concept of purchasing a car: According to a 2015 study by Goldman Sachs, just 15 percent of Millennials said that buying a car was extremely important, while a staggering 50 percent responded with an indifferent “whatever,” meaning that while car ownership would be nice – it was not really that big a priority. It’s yet another sign of the era in which they grew to adulthood; the emergence of the Internet, gaming, commuter gridlock and more has recast many things that were once considered a vital rite of passage.
In the Shadow of Mom and Dad, but Ready to Break Out
But wait a minute. Even though the clear message is that Millennials don’t feel a car is all that important to their lives, they’re still buying cars – and indeed are an irresistible force in the world of automotive retail. A recent report by J.D. Power and Associates gives them a 27 percent share of 2014 new car sales, up from 18 percent in 2013. Bloomberg Business found that Millennials are now the second largest group of new car buyers, behind – you guessed it – Mom and Dad Baby Boomer. That’s not just speculation: Dealertrack’s most recent 2015 Credit Application findings showed that Millennials are a group on the move, taking an almost 35 percent share of unique auto applications, with a healthy representation in the Subprime space of 40 percent.
So, it’s possible that many Millennials may not be as emotionally invested in the allure of the open road as previous generations, or as enticed by the feeling of freedom that comes with a set of keys – or key fob. When they see cars, some young people see expense, responsibility and necessity. Growing up in the hyper-fast and wide-open Internet age gives them a new perspective on quaint things like Sunday drives. But like everyone, they need a car – as we all do at some point – so millions are jumping into the funnel. The challenge, per the 2014 AutoTrader Car Shopper Study, is that they’ve busted the funnel to pieces, and are asking for a new approach to sales based on some key demands:
- 70 percent want to start the financing process online.
- 56 percent want to negotiate in their own way.
- Many would rather leave than stick around and wait.
The emerging outline, instead, is that today’s average one hour wait in the F&I office is far too long to wait. Car buyers, young and old, now have the power and desire to change the way automotive retail works, from the online experience to the showroom, service bay and beyond. The changes have already started; innovations like digital retailing aren’t going away. The only question is whether your dealership will be willing and able to embrace this highly efficient, fluid and online-focused sales and financing experience.
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