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Gen Z Could Make Auto Sales Zoom
A study indicates automakers and car dealers should expect a new generation of buyers who want the product but watch their spending.
4 Min Read
More than 70% of polled teens said they’d give up social media for a year in order to get a car.
DETROIT – Move over Millennials, here comes Generation Z, and unlike their immediate age-group predecessors, they’re raring to buy cars.
That’s according to a new survey that says 92% of polled youths between 12 and 17 plan to own a vehicle.
“They are ready, and that is great news for the auto industry,” says Isabelle Helms, vice president-research for Cox Automotive, parent company to study-commissioners Autotrader and Kelley Blue Book.
The automotive good tidings affect car dealers, and not just because they are the ones who sell cars. It’s also because 68% of surveyed Gen Z members want face-to-face interaction at the dealership when they reach the car-buying years.
“That surprised us,” Helms says of the readiness to visit a dealership. “They want to test drive cars and they want dealers to answer questions they couldn’t answer on their own.”
Her advice to dealers: “Embrace the customer-centric experience of providing answers, getting people into the right cars and providing a superior test drive.”
Some study results surprising, Helms says.
Although oft-discussed Millennials, ages 18 to 34, were not as adverse to vehicle ownership as some people had originally thought, they were as a group slower to enter the market. In retrospect, that had more to do with their financial situations than an aversion to autos.
But Generation Z, currently accounting for 23% of the U.S. population, shows signs of having no such hesitation, Helms says during a presentation to the Automotive Press Assn. here. “Their love for cars and driving is very much alive.”
Although currently their main source of income tends to take the form of allowances doled out by parents, that soon will change. Generation Z spending power by 2020 is expected to reach $3.2 trillion, the equivalent of some countries’ gross domestic product.
An indication of how enthusiastic Gen Z is about the prospects of owning a car is that 72% of polled teens say they would give up social-media activities for a year in order to have a car.
“I shook my head at that one,” Helms says. But they covet their smartphones: only 33% said they’d go without theirs for a year if it meant getting a car instead.
Don’t expect tomorrow’s car buyers to spend lavishly, Helms says. “They are savers and realists.
“They are practical in decision-making. They are going to be looking at (monthly) car payments and their budget. Their decisions are tied to their wallets.”
They differ from previous generations, including Millennials, in that they don’t see a purchased vehicle as defining who they are, she says. “This generation is more practical. They are not as focused on brand and style. Gen Z is less materialistic than Millennials were as teens.”
Certain vehicle brands resonate with today’s youth, according to the study. For young people between ages 12 and 15, those include Honda, Chevrolet, Ford and Jeep. For 16- to 17-year olds, brand preferences run to Chevrolet, Ford, Honda and Toyota.
Other study highlights about Gen Z:
They’re not particularly environmentally friendly. Price is cited as most important to them. When asked their opinion on the benefits of eco-vehicles, 43% cited saving money on fuel, 30% said preventing global warming.
They values safety features more than previous generations. Their focus on safety is closely related to a sense of practicality, Helms says. “This is a generation that grew up hearing don’t-text-while-driving messages,” which apparently got the point across.
The prospects of self-driving vehicles appeals to them. Fifty-four percent of Gen Z respondents feel that way, mostly because of safety concerns. Sixty-one percent of Gen Z teens think autonomous cars will make roads safer.
They’re not big on transportation sharing services such as Uber and Zipcar. Only 8% say they’d prefer car and ride sharing over car ownership.
“While we have a few more years before this generation really starts to get behind the wheel of a car, preparing for them now by understanding what makes them unique will translate to success for automakers and dealers alike,” Helms says.
During a Q&A session, she acknowledges that what young people say now can change as they get older and mature. “As we say, ‘Now that the research is done, we wait and see.’”
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