In Part I of this series, The Millennial Mindset, the focus was on millennials and their impact on the marketplace—and not without reason. The fact that they are over 75 million strong in the U.S. alone gives them enormous influence and buying power. Now, however, it’s time to take a look at Generation Z, the generation born after millennials—and the first true digital natives, those who have grown up completely in a digital world.
Defining Gen Z
Many members of Gen Z are just coming into their purchasing power, with the oldest members of this group beginning to turn 20 in 2016. Roughly defined as those born between 1995 and 2010, this generation is quickly creeping up in population, readying itself to outnumber its predecessor, the millennials.
Defined as true digital natives, members of Gen Z have had access to technology since they were born. And while they may not have been using phones in their cribs, it didn’t take long for them to develop an affinity for iPads, gaming systems, TVs, and smartphones. With Gen Z’s high levels of digital interaction, brands are able to gain an inordinate amount of information about their preferences as consumers; however, many still remain perplexed as to how to accurately market to these younger consumers. The one thing that is perfectly clear, because they’ve grown up with technology, is that they demand near-instant answers and information.
Although they’re not all spending on their own behalf yet, this generation influences about $200 billion in spending power, much of which comes from their parents and caretakers. However, these are the professionals and consumers of tomorrow, and that has marketers very intrigued. For the automotive market specifically, this generation brings good news, because unlike the previous generation, Gen Z demonstrates a stronger interest in owning vehicles. A recent study by Autotrader and Kelley Blue Book reveals that not only are 92% of Gen Z consumers planning on owning vehicles, there are specific things that come along with vehicle ownership they’re looking forward to:
- 32% say it offers them freedom,
- 29% say it gives them responsibility, and
- 23% say it offers excitement.
Gen Z consumers look at vehicle ownership so positively, in fact, that a large number of them said they would give up social media, new clothing, or cell phone access for a year if it meant getting their own cars. This is a huge difference from the preferences of millennials, who are often content to take the bus or ride share with friends, indicating a promising trend for the auto industry for the coming years.
So one big question remains for auto dealerships when it comes to this youngest consumer generation: What they can do to win over this these shoppers when they’re ready to buy?
Despite the fact Gen Z has grown up surrounded by technology, buying online isn’t important to them when it comes to car shopping. 67% of surveyed Gen Z members stated they would rather car shop in-store as opposed to shopping online. This generation is looking for the best experience overall, including convenience and price, both online and at the dealership. This generation will still be shopping online, but it’s important to them to visit the dealership for test drives and to see additional options and add-ons that may be available.
Because the buying habits of Generation Z consumers tend to be more cautious overall—and because they’re looking for a great experience—dealerships that offer experience centers or product specialists will likely do well in winning them over. Additionally, look for these shoppers to be great candidates for extended warranties, as well as candidates for F&I products like extended service plans or prepaid maintenance.
Gen Z continues is shaking things up across the board, and vehicle choices are thrown in the mix, too. While millennials earned a name for themselves for choosing the most environmentally friendly cars, Gen Z is focused on saving money. Whether it’s the sticker price, gas mileage, or overall maintenance, they’re looking for rides that are the most price-friendly.
This generation is also more focused on practicality than previous generations, with a serious bent toward safety as well. In fact, 43% of Gen Z teens value safety features, up from 25% of millennial teens and only 11% of Gen X teens. Gen Z actually places more value on the safety features of a vehicle than they do the infotainment center, proving once again that Gen Z is like no other generation before it.
While millennials are still capturing the attention of marketers everywhere, they’re now sharing the spotlight with their younger counterparts: Gen Z consumers. Large in numbers and leveraging their own increasing buying power and that of their parents, they have the capacity to change the way businesses sell, market, and communicate with their audiences. These young consumers’ expectations are different, driving different choices in products and services.
For dealerships, this means it’s imperative to focus on the overall experiences that appeal to this generation, as well as vehicle features, benefits, and savings. Gen Z is growing up and growing into its buying power, and those who are focused on developing business plans to answer the growing needs of this generation will succeed in capturing their attention when it’s time to buy.
Author: Joey Little
Joey Little serves as Director of Digital and Social Engagement for AutoAlert. An expert in customer experience management, he educates automotive professionals at speaking engagements across the country. With results-driven advice and proven industry knowledge, he assists dealerships in reaching their audiences and increasing business via their social platforms.