American Seniors and Millennials – Two Huge Opportunities for the Auto Industry

auto industry

Today’s American seniors are healthier and have more discretionary income than ever before. Likewise, millennials are the up and coming generation with more purchasing power than any other demographic. The good news for the auto industry is that they are spending and in the market for new cars.

American Seniors

According to US Census data, from 2003 to 2013 the number of licensed drivers over the age of 65 increased by 8.2 million, a whopping 29% increase. There are also approximately 3.5 million drivers over the age of 84, a 43% increase over a ten-year period. Clearly this demographic can no longer be ignored and automotive manufacturers and dealers are taking notice.

They also aren’t in the market for older vehicles simply to get them from point A to Point B. They are looking for minivans to drive the grandchildren around, or perhaps a new Harley may be to their taste. According to Harley-Davidson CMO Mark Hans-Richer, “We sell new bikes to guys in their 80’s all the time.” And yet other segments within this demographic are looking to spend big on luxury. According to CarGurus, the number one car searched by senior citizens on its site is a Corvette.

Americans are living longer, with life expectancy increasing by 3.3 years in the past 20 years. Additionally, new safety features such as active braking, backup mirrors, and blind-spot warnings and sensors have made trading up to a newer model more appealing to older drivers. Despite the huge profit potential of this generation, many auto dealers aren’t catering to this group as much as they could, leaving opportunities – and cars – on the table, or rather in the showroom.

Millennials

Millennials are a huge demographic with tremendous spending power. By 2025, millennials will account for 46% of total personal income in the U.S, according to Accenture. Despite the misconceptions that millennials are not interested nor have the means to purchase a new car, research shows that just the opposite is true.

According to a report by J.D. Power, millennials accounted for 26% of new vehicle retail sales. Additional research by a Cars.com Nielsen Omnibus study shows that Millennials are more likely to purchase a car over the next 12 months. 35% of Millennials indicated they would be in market for a car as compared to 25% of U.S. adults overall.

These numbers will only continue to grow over the next five years as this generation continues to mature. According to a study by Deloitte, almost two-thirds of Millennials plan to buy or lease a car within the next three years, and more than three-quarters plan to purchase or lease within the next five years.

How to Target the Generations

Both American Seniors and Millennials represent great opportunities for the automotive industry. This includes manufacturers and dealers as well as insurance carriers and aftermarket services. However, you may be missing these audiences entirely if you aren’t targeting them through the channels they prefer. Each generation approaches car shopping differently and you must target them with the messages they will respond to and the channels they most frequently use to reel in new customers.

American Seniors

Today’s seniors are using more digital channels than ever before. They not only have email, but they are searching on Google, browsing Facebook, and reading newsfeeds. However, while this generation may be more technically advanced than their parents, marketing online to this older generation continues to be a struggle for many businesses. According to study by the Newspaper Association of America, only 27% of seniors used the internet to make a purchase. This is a generation of consumers who did not grow up in the digital age and prefer more traditional and offline communications in comparison to online ads and mobile messaging.

So despite the articles that may tout that this generation should not be forgotten when it comes to digital, research continues to show that direct mail is still considered the most effective medium for this generation. However, this doesn’t mean you need to blanket them with mass messaging that has no relevance. Direct mail is a hugely effective channel for audiences across all age groups, as long as you personalize the messages and target with the right offers.

Consider using a specialized automotive data source to target senior adults with relevant messages. For example, you can create a list by demographics such as age, hobbies, lifestyle, and proximity to your dealership. Additional automotive intelligence can also be added to each consumer profile, such as exact make and model of the current vehicle being driven, other vehicles in the household, and Blackbook value of the car they currently drive. If targeted in the right way, seniors can become loyal customers who spread the word to their friends and family.

Millennials

Millennials are technically savvy and seek information across multiple social and digital channels.

According to Placed Inc.:

  • 65% use a smartphone to research prior to visiting a dealership, compared with 53% of those 35 and older.
  • 41% of Millennials use multiple devices for research, compared with 32% of those 35 and older.
  • 85% of Millennials use the Internet for vehicle shopping, and they use more digital sources of information than shoppers 35 and older

Millennials also turn to independent research sites more often than OEM or dealership sites. And when asked how important are online reviews of dealerships written by consumers in helping select a dealer to purchase from, 79% answered “Very Important or Extremely Important”. (Source: Cars.com)

To reach millennials, dealers and OEMS must have a strong online presence across a range of digital channels. Delivering a consistent message across mobile and independent sites will go a long way to gain attention with this younger generation. Additionally, encouraging online reviews and social engagement is an important process for building up positive word of mouth.

As with any age group, seniors and millennials are generations with very unique expectations, lifestyles and channel preferences. By understanding the characteristics of each and creating relevant messaging across the right channels, the automobile industry can make huge strides in gaining these high value customers.

To learn how to target millennial or senior car prospects with accurate marketing data, learn more about Auto ID.

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Comment by Larisa Bedgood on October 19, 2015 at 9:49am

David - Thanks for sharing David. Interesting perspective. [Life] is a marathon, not a sprint too! Appreciate your wisdom.

Brian - Right, you have a point. Seniors, obviously, have much more spending power than millennials. However, Millennial demand for cars is growing quickly. This is a good article to belabor this point: http://www.theatlantic.com/business/archive/2015/04/millennials-not... I'll have to do some more research though on the correlation between millennials having debt and not buying new cars.

Thanks for your comments!

Comment by Brian Bennington on October 18, 2015 at 10:10pm

Dear Ms. Bedgood,  Initially, I want to apologize for addressing a comment on your Sept. 17th "Three Ways Connected Cars will Impact the Automotive Industry" post to "Michael."  I discovered it when I read your bio after reading this post.  Where that came from, I can't even guess.  However, I'll be the first to admit I'm old and not too bright, but my apology is sincere and I hope you'll accept it.

Noticing that David Ruggles, an experienced car guy who I respect commented here, piqued my interest.  While I'm a longstanding member of the "Statistics will say anything if you torture them enough" club, and the growing and tedious trend to use them to reinforce increasingly abstract selling and marketing propositions, I looked for the things you wrote I agree with rather than what I don't.  However, I was a bit surprised at how optimistic you are about the buying power of millennials considering the staggering amount of education debt they're carrying and the documented concern OEMs have about it.

Your observation about employing personalized messages to seniors is "right on."  I've been doing it for a small group of SoCal dealerships for over 20 years, and its results affirm it.  Our ghostwriting is "light" on offers, other than alluding to "of course, they'll get a deal," instead emphasizing the ongoing admiration our clients feel toward their customers, backed up with plenty of reassurance.  Come to think about it, that probably sounds pretty abstract to you.  Well, it's based on a word you'll seldom hear mentioned in regards to selling, yet its principles are fundamental to all successful relationships.  The word is "Romance," and I mean it in totality, not just the "love" thing.  And, what's cool about it is, it seems to work on people of all ages, even millennials.  As simplistic as that may sound, people do place true tangible value on what others (including their sales people) think of them.               

Comment by David Ruggles on October 16, 2015 at 8:49pm

I am convinced that gratuitous technology for the sake of bragging rights has caused many Americans to keep their old vehicles.  I doubt the car companies will figure this out.  Lane change and back up cams are a great thing and are well integrated.  Having to drag out one's owners manual for something small is a real pain.  

One of the biggest misnomers is that consumers know more today than they did before.  That just isn't true.  They certainly have more information but have no way to unpack it.  Its like drinking from a fire hose for them. 

We really do need more women in auto retail.  For that to happen the testosterone laden approach needs to be shelved.  That happens at the dealer level.  If the dealer wants that to happen, it will.  Every thing in sales doesn't need to be a sports metaphor.  Our business is a marathon, not a sprint.  But there's another sports metaphor.  But it acknowledges the fact that every morning, if you run through the door because you're so inspired by the manager's morning speech, you're probably not a marathon runner. 

Comment by Roger Conant on October 16, 2015 at 12:09pm

Isn't it interesting that your image for this post is two women.  And women are a bigger and broader opportunity than either of these two. And as much as many in the retail world would like to think that women want to be treated the same way as men...they're dead wrong.  In order to treat women equally, in a mainly male retail environment, you have to treat (which is communication, right) them differently--usually better.

This too! (Ford research) Women have VETO POWER over 95% of all retail auto transactions they are included in. 

A great resource for this is...  http://www.forbes.com/sites/bridgetbrennan/

http://www.forbes.com/sites/bridgetbrennan/

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