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11月 25th, 2024The Future of Automotive Sales: Adapting to Gen Z Car Buying Trends10月 11th, 2024Q3 EV Retail Sales Report10月 3rd, 2024Urban Scientists provide a statistical lifeline to UK-based Royal National Lifeboat Institution - NEWSROOM
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11月 25th, 2024
The Future of Automotive Sales:
Adapting to Gen Z Car Buying Trends
The automotive industry stands at a crossroads, facing fluctuating sales dynamics, evolving retail models and an urgent need for future-proof strategies. As traditional sales approaches give way to digital experiences, one rising demographic is poised to reshape the market: Gen Z. With unique expectations around technology, sustainability and ownership, understanding how this generation perceives mobility is no longer optional — it’s essential. A recent survey1 conducted by the Harris Poll on behalf of Urban Science, gathered insights from new car buyers and owners across multiple countries, exploring their attitudes and experiences with the new-car buying process. The results revealed intriguing differences not only between countries but also across various age groups, providing valuable intelligence for dealers and OEMs. While the age demographics presented within this article are derived solely from U.S. respondents, they offer compelling insights that are likely to resonate on a global scale, highlighting the evolving preferences and expectations of consumers in today’s automotive landscape. This survey serves as a vital resource for understanding how generational shifts are shaping the future of car sales and marketing strategies worldwide.
Understanding Gen Z’s Perception of Car Ownership
As expected, the survey confirmed that openness to purchasing a vehicle entirely online increases with younger generations, with 38% of Gen Z — typically defined as those born between 1997 and 2012 — auto buyers expressing willingness to do so. However, we are now witnessing a new attitude emerging among Gen Z regarding vehicle ownership and their purchasing process. Many alternatives to car ownership are available, and various demands on consumer spending compete for attention; yet encouragingly for the sector, the majority of Gen Z (68%) still believe personal vehicle ownership is valuable. While this figure is notably lower compared to 90% of baby boomers who value vehicle ownership, it signals that cars remain important for Gen Z, just in different ways.
Gen Z’s growing interest in car ownership may be driven by a desire for independence, control over personal safety and the declining appeal of shared transportation options post-pandemic. As they enter the workforce and gain financial independence, large purchases like cars are becoming more attainable, further fueling this trend. Moreover, cars have evolved into lifestyle symbols for Gen Z, with tech-forward features and the sustainability of electric vehicles (EVs) aligning with their values. In fact, over half of Gen Z consumers considering a new vehicle are looking at battery electric (BEV) or plug-in hybrid electric vehicles (PHEV), with 63% also considering hybrids, compared to 37% considering a gas-powered vehicle.
Gen Z new-vehicle considerations:
Gen Z Preferences for Sustainability and Electric Vehicles
Looking ahead, Gen Z’s commitment to sustainability is even clearer. More than half agree that by 2030, they would be willing to accept only EV options when purchasing a new vehicle, underscoring their future-oriented mindset and how car ownership, for them, is not just about mobility but also a reflection of their environmental and tech-conscious values. This generational shift is poised to reshape the automotive industry in the coming decade.
As you may expect, the main concerns shaping Gen Z car buying trends are all financially driven. More than any other generation, high fuel prices (53%) top the list as their biggest concern, with cost to service, cost of insurance and other economic factors ranking as additional concerns. However, when compared to the other generations, Gen Z is actually less concerned about affordability and vehicle resale value than older generations, with 46% expressing affordability concerns, compared to 56% of millennials, 70% of Gen X and 79% of boomers. They do, unsurprisingly, state that they have more concerns with environmental impact than other generations, which is reflected in their willingness to pay up to a 47% premium above the cost of a comparable gas-powered vehicle.
The Role of Dealerships in Gen Z’s Car Buying Journey
Perhaps the most encouraging finding for dealers though (and OEMs that have maintained a full dealer network) is that Gen Z are showing a strong and growing belief that physical dealers still have an important role to play.
Nearly half of Gen Z believe that dealers are essential. This figure is up 14% from the previous survey last year. Nearly as many (43%) agree that they would not buy a vehicle without a dealership involved. Furthermore, more than half (51%) strongly agree that dealers help make the purchase of a vehicle easy and convenient. What is also important to restate is that despite the value they are increasingly placing on physical dealers, 38% are also open to buying fully online.
These statistics really speak to the omnichannel expectations of Gen Z. The increased value of physical dealers reflects the desire to get value from the shopping experience of such a high-value item. A car (especially a new car) will often represent the highest value purchase of their life to that point. When this is coupled with the fact that the car will be an immediately depreciating asset, it stands to reason that information, proximity, time and advice are highly valued in the buying process. Some of these factors do not provide as much gratification or feedback when carried out online.
A telling quote from a Gen Z shopper in a retail environment in the U.S. is that “online shopping is for browsing, while in-person shopping is for buying.” This points to a well-researched and well-informed consumer. To shed more insight, the survey also dives into which parts of the car buying journey are most likely to be conducted in-person by Gen Z.
Typically, Gen Z — and millennials, too — are much more comfortable with vehicle setup and orientation compared to older generations, with nearly a third of both groups willing to complete this part online. In contrast, only 15% of boomers are comfortable doing so online. However, when it comes to researching new vehicle features and specifications, 48% of boomers prefer to do this online, compared to only 43% of Gen Z. This indicates that while Gen Z is interested in learning about a vehicle’s capabilities, they prefer to do so in person, likely from an expert at a dealership. This underscores the importance of in-person interactions during the buying journey for Gen Z, as they seek reassurance in making informed decisions about technology and features, similar to their approach when purchasing a phone or laptop. Interestingly, at every stage of the car buying process, millennials are actually more inclined than Gen Z to conduct their research online.
“Nearly half of Gen Z believe that dealers are essential. This figure is up 14% from the previous survey last year.”
Incentives That Attract Gen Z
74% of boomers say they would buy from the dealer offering the best price, but only 55% of Gen Z say the same thing. Yet 42% of Gen Z would be swayed on dealer choice by an incentive — as opposed to only 26% of boomers. This information could and should drive marketing efforts aimed at attracting younger buyers. The incentive does not necessarily need to be huge either. The vast majority (87%) of the Gen Z shoppers stated that as little as $35 would be enough to entice them into a dealership for a test drive. With 70% of Gen Z also stating that they would never buy without a test drive first, it really shows how some form of incentivization could be a great tactic for capturing Gen Z car buyer opportunities.
So, while all of this makes for encouraging reading, there are still some clouds to balance the silver lining. Gen Z can be a tough crowd, especially with new-car buying sums of money on the line. 26%With the continued and forecasted shift toward electric vehicles, there comes a more complex education process needed by dealers to inform potential buyers. Only 41% of Gen Z state that in their view dealers are keeping up on understanding and advising the marketplace on EVs. This figure is even lower incidentally Boomers Gen Z (at 35%) for millennials. Boomers, on the other hand, are more satisfied — 58% of them believe dealers are keeping up. Clearly this represents a gap to be closed to really take advantage of the willingness of Gen Z to visit dealers, and incentivization could be a strong tactic here to providing opportunity to change opinion. 83% of Gen Z agreed that a $35 incentive would motivate them to test drive an EV, a figure that rose to 91% at $50.
Percent of buyers swayed to choose a dealer based on incentive:
Percent of Gen Z buyers motivated to
test drive an EV based on incentive amount.
Ultimately, the automotive industry must adjust to Gen Z’s distinct preferences to succeed. Dealers can capitalize on this generation’s willingness to engage both online and in person by creating a balanced buying experience. By addressing affordability concerns and improving EV education, automotive leaders can attract Gen Z buyers. With targeted incentives and a focus on technology, the industry can foster strong relationships with this generation, ultimately driving future sales and success.
Science as a solution
Since our founding more than four decades ago, our proven, scientific approach to dealership planning has continued to improve and evolve. It’s an approach that stays ahead of the technological curve to help improve the performance of dealership networks — and it continues to be the industry standard.
Let us show you how we can leverage the power of science to your challenges. Call or email me.
Paul Dillamore
Managing Director, UK +44 7770 605982
pmdillamore@urbanscience.com
1. “GM to Release Plug-in Hybrid Vehicles, Backtracking on Product Plans”
2. “EV Euphoria is Dead. Automakers are Scaling Back or Delaying their Electric Vehicle Plans”
3. Urban Science® DataHub™ | Sales
4. Source: Urban Science Online Consumer and Dealer Studies, February 2024. These surveys were conducted by The Harris Poll on behalf of Urban Science among 3,005 U.S. adults aged 18+ and 250 U.S. automotive dealers.
