Understanding Millennials

For the past few years, it seemed like a new article was published every month stating that the reason Millennials weren’t buying cars was due to personal preference. But today, economics has proved that assertion false.

According to J.D. Power & Associates, Millennials (those born between 1980 and 2004) accounted for 27% of new-car sales in the U.S. last year. Millennials have surpassed Generation X to become the second-largest group of new car buyers after Baby Boomers. Current trends show the influence of the Baby Boomer generation receding and the buying power of Millennials is on the rise.

With the economy steadily expanding, the job market is improving and wages are going up. Millennials now have greater ability to buy a car, a house, and get married and have children. You need to consider their growing buying power and how it can affect your business. Appealing to the Millennials can significantly boost your overall profitability.

Building Trust

Because Millennials entered adulthood during one of the worst recessions in U.S. history, their relationships with brands and companies are very different from Generation X and Baby Boomers. Millennials saw parents and siblings lose jobs, homes and cars during the recession, and the thought at the front of their mind is “I don’t want that to happen to me.”

That thought is the reason why they held off on hitting adulthood milestones and took precautions such as returning to school, moving in with parents or taking part-time or low-paying jobs that did not leverage their higher education.

This mindset is what determines how they carefully evaluate the pros and cons of making big-ticket purchases today. And, when they do make that car or home purchase, they want to be protected from life’s uncertainties such as illness, job loss or unemployment.

Bottom line is you have to gain their trust in order to gain their business, and their trust is not easily obtained. However, there are strategies you can implement to help toward that end.

One of the best ways a dealership can appeal to Millennials is through the sale of strategic F&I products, like a vehicle-service contract (VSC) or vehicle-return protection. These products protect consumers from unforeseen circumstances that can negatively affect their ability to make their car payments.

VSCs gives consumers more control over their monthly budget by taking care of unexpected expenses related to a vehicle breakdown. Vehicle-return protection is another way consumers can feel protected when unforeseen life events occur, such as involuntary unemployment.

Today’s millennials have experienced tough times through the Great Recession, and they want to know that someone is looking out for them. Dealers who recognize this and adapt their products and services to meet the needs of Millennials will be poised to gain their trust and business.

John Stephens is senior vice president of Dealer Services at EFG Companies. He can be reached at 972-445-8910 and [email protected]