Appealing to millennial car buyers expands opportunities for dealers

Posted by Meg Bernazzani on May 23, 2018

Younger Canadians are buying cars, but you need to meet them on their terms

Type the words “millennials are…” into Google, and the resulting auto-complete options present some fascinating insights into how people regard this key consumer segment.

Among the most prevalent themes is how they are undermining entire industries, contributing to declining sales for everything from diamonds and golf to everyday items like bar soap, cereal, and napkins.

Millennials are Canada’s largest generational cohort—about 9.8 million people—and boast combined annual income of $237 billion. Businesses are understandably anxious about the impact of falling out of favour with such a powerful consumer segment.

The good news for the auto industry is that it has been largely immune to millennials’ changing priorities. The “bad news” is that it can no longer rely on tried-and-true tactics to attract, engage, and retain them.

Instead, millennials are demanding that car companies and their dealer networks meet them on their terms. That means not only offering features like connectivity, but communicating with them via their channels of choice.

Millennials are still buying cars…

2017 study from Accel + qualtrics entitled The Millennial Study suggested that millennials aren’t actually the “non-materialistic monks” they’ve been portrayed as by the media. In fact, the study found that 78% of millennials own a car, and 75% of those who don’t hope to in the future.

Meanwhile, Intercept Group found that nearly a quarter (22%) of Canada’s millennials purchased a new car last year, while J.D. Power predicts they will account for 40% of the new car market by 2020.

…but much of the process is taking place online

Not surprisingly for a segment known as “digital natives,” the key to achieving traction with millennials lies online. Canadians aged 25 to 34 spent an average of 1,839 minutes a week online in 2017 according to IAB Canada’s most recent Canadian Media Usage Trends (CMUST) report, compared with 1,074 minutes watching TV and 38 minutes reading a newspaper.

Millennials also conduct a lot of pre-purchase research online. According to the millennial and Gen Z research firm Ypulse, a “tendency to research everything to death online” defines their path to purchase, to the point they can feel like an expert by the time they arrive at a dealership.

In fact, millennials in the market for a new car have already visited an average of 18 sites before even setting foot in a dealership. Of the 24 touchpoints the average car buyer encounters on their path to purchase, 19 are digital—including watching a YouTube video, visiting a brand’s social media site, or clicking on a display ad.

The dealer website is a key information hub

A study of U.S. car shoppers conducted by digital marketing firm Adtaxi found that 86% conduct online research before visiting a dealership, with 96% of respondents indicating they find dealer websites useful in their research.

Nearly a quarter (24%) of shoppers cite dealer websites as their first step in the car buying process, behind only aggregate sites like CarGurus (32%) and search engines (30%). By contrast, a manufacturer’s website is the first stop for only 14% of new car shoppers.

When it comes to dealer website features, 42% of respondents deemed vehicle description pages most helpful, more than double the amount of the next two features: a specials page (20%) and an hours and directions page (19.6%).

According to Google research, 87% of car buyers indicated that a positive website experience can be a key influence on their purchase.

Google says that search interest in “car dealership near me” has increased exponentially among Canadian car buyers in recent years. Because many of these “near me” searches take place on mobile, dealers must ensure that their website is optimized for mobile too.

Advertising still matters, especially digital/social

A common assumption is that millennials shun advertising, yet 76% of respondents in the Adtaxi study were able to recall an online car ad they saw in the past year (81% of males, 70% of females).

TV and newspapers have traditionally been the de facto advertising vehicles for the auto segment, but reaching modern consumers requires developing Search Engine Optimization (SEO) strategies and boosting your social media presence.

Platforms like Instagram, for example, can become a key lead generation tool when deployed correctly. Canada’s 8.5 million Instagram users are avid users of the social media platform, checking it an average of 11 times a day, six days a week.

More than half of its users (60%) have indicated that they learn about products and services on the platform, with 75% taking action—such as visiting a website, searching, shopping for or purchasing a product, or telling a friend—after coming across a relevant post.

Automobiles are a natural fit with the photo/video sharing app, and using appropriate hashtags (#make #model #cityname etc.) can be instrumental in attracting engaged customers seeking specific information.

In short, millennials are still buying cars, can be swayed by (the right) advertising, and are responsive to the brands that meet them on their terms. You might even say that “millennials are…” not to be overlooked.

Topics: industry insights, millennials