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Auto Industry, You Need Millennial Buyers More Than They Need You

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Chapter 1: To Catch a Millennial
cranky_old_manThere’s a myth going around these days that Millennials just need to “grow up” and face the facts of life when it comes to cars. Business Insider recently published a pretty scathing piece against Millennials that sounds like it came straight from the mouth of your cranky grandfather who missed his mid-day nap.

The piece argues that previous generations had to put up with the inconveniences of car ownership and doggone it so should the kids. So let’s put this all-too-common refrain into perspective before getting into why the Gen-X’ers and Baby Boomers who own the dealerships and auto shops need Millennials more than Millennials need them.

First of all, it’s really, really unfair to tell college students and those entering the workforce to “get over” the cost of vehicle ownership. It’s more than just offensive to people’s life situations: it’s bad logic. Let’s pretend for a minute that, like a majority of Americans, we’re not car fanatics, and we don’t know cars inside and out. For most people, car ownership isn’t about custom designs, greater horsepower, racing shocks, etc. It’s about getting to and from work without spending a fortune. Virtually every urban center has some form of public transportation (sorry L.A., you tried), and it’s much easier and cheaper to get a monthly pass for the train than it is to suffer long commutes and traffic congestion, in addition to gas and maintenance costs. The extra “freedom” a car offers may not be worth the financial burden to those who can get around using one on a daily basis. Given that a massive swath of the Millennial population lives in cities with public transportation access, it’s weird to call them whiners and complainers just for being cost-conscious.

Perhaps the article’s strangest moment is when it states, “Buying a car… is like setting money on fire and throwing it down a hole. But that’s the way it has always been,” and then goes on to accuse Millennials of veering away from this terrible, money-sucking trend. The whole “in my day we walked ten miles to school and liked it” routine is simply beyond parody at this point. Aren’t Baby Boomers the “smart” generation that knows how to save? Wouldn’t they applaud a young decision-maker who wants to save up for less costly endeavors, whatever they may be? Could we say this is about buyers’ rights, and Millennials are just tired of being taken advantage of?

You might be wondering why we’re being so hard on the older generation. After all, BendPak is an establishment business that deals mostly with middle-aged crowds. The reason is that while we’ve been supplying customers with quality car lifts and shop equipment for half a century, there are new buyers in town (Millennials) that are not always convinced that they should be buying. Simply put, the people we sell to need to be selling to them. This article will examine how the auto industry needs to adjust its methods to attract Millennial buyers.

Chapter 2: Remember LILLLP: Low Interest, Long Loans, Low Payments
young-woman-with-keys-sliderWe’ll uh… work on that acronym. First things first, we mentioned that Millennials in urban centers aren’t really in the car market. This is true, but ultimately, there are still plenty of young, enthusiastic car buyers outside those markets. The catch is that they’re not buying unless they can get low monthly payments. We’re talking 70+ month loans. We’ll have to monitor how much this loan length increases in the years to come, but loans are getting longer as payments shrink. If you’re in the business of selling cars, Millennials are a fairly large market, with 35% of loan originations coming from buyers in the 18 – 35 age range. Smart financing is so important to dealers looking to capture on this newer, more finicky demographic.

Millennial car buyers have also shown an interest in buying when interest rates are low. Low payments, low interest rates. Combined with the extended loan periods, this sounds like a “have your cake and eat it, too,” scenario, but many of these loans are relatively small and are being used to pay off less expensive used cars. The Millenial trend is to wait; more young people are living at home for longer periods of time, and they’re taking their time getting out of the house and making big purchases, like cars. This isn’t necessarily a “bad” thing; it’s just the way it is. They’ll wait for the low interest rate and the good loan to appear if it isn’t offered at the moment.

Last but certainly not least, the smart dealership needs to use low-pressure sales tactics to attract Millennials to their businesses. Anyone willing to wait on making a big purchase is going to be turned off by an aggressive sales strategy. Don’t be pushy, but do be patient. Younger buyers are more likely to shop around. Be the bigger, better, more with-it dealer and it will pay off in the end. Remember: LILLLP. Keep in mind that if you do decide to play it old-school, Millennials will just cut you out altogether and do their shopping online, so there’s that.

Chapter 3: Your Marketing Stinks!
A recent NerdWallet survey found that 43% of Millennials surveyed found owning a car to be a hassle. This isn’t the most scientific study ever conducted, to be sure, but it’s a peek into the Millennial mindset. The appropriate industry response is as much a question for top-level marketers as it is for the dealerships. If Toyota, Ford and Chevy want to sell to the next generation, they need to meet them where they’re at and convince the young folks that purchasing their particular brand will ensure a virtually hassle-free experience.

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As previously mentioned, if the marketing isn’t convincing—or even if it is—Millennials have shown a willingness to delay major purchases. For industry insiders, it’s simply not good enough to throw up both hands and say, “Well, that’s just not the way all this works,” because that’s a sure-fire way to lose customers, as well as the respect of potential clientele. We should be asking young buyers, “What would make you more willing to buy a car in the next 6-12 months?” Not a radical idea in terms of salesmanship, and there are certainly companies that are going to great lengths to reach Millennials.

eco-friendly-carNissan is one example of a company staying ahead of the curve. They ran their own survey and found that 76% of Millennials questioned wanted an eco-friendly car. It should be no coincidence that a Sustainability page is prominently placed on their website. If you follow that link, there’s no flashing neon sign that says, “Millennials Look Here.” They simply cater to what Millennials are looking for: environmentally friendly, zero-emission, more safety features, etc.

When it comes to better marketing to Millennials, the truly forward-thinking folks out there are jumping on social media. Honda even ran a Snapchat filter with the slogan, “They see me rollin.” Their own social media manager acknowledged this is a new sort of advertising that’s necessary to reach younger buyers, and not everyone in the industry is comfortable “going there.”

If you’re still not convinced that reaching Millennials for business requires new tactics, you’d do well to take the advice of MaryLeigh Bliss, chief content officer at Ypulse, a Millennial-oriented research group, when she says, “It’s not as appealing to [Millennials] as it was to previous generations to own a car made to ‘show off.’” Millennials make up the largest generation that’s ever existed, so the auto industry needs to be sure it’s doing what it can to attract the next generation of big-time shoppers.

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Chapter 4: I can’t. Even. (Do basic repairs.)
The scene opens on a warm summer day. A gray-haired father in his earlier 50s is having “the talk” with his 16-year-old son. (Not the talk you’re thinking of.)

Dad: Son, now that you have a license, I need to show you how to change a tire in case you get a flat. It’s important to be able to learn to take care of yourself. I won’t always be here t–

Son: No, Dad! Ugh! I can’t even right now!

Dad raises his fists to the heavens.

 Dad: SNAPCHAAAAAAAAAAAAT!

THE END

car-happy So in what was perhaps the worst representation of father/son relations since Shakespeare, we just presented an all-too-common scenario in the American household. Millennials are much less knowledgeable than their parents about cars. If you think back on what we covered in Chapters 1 and 2, Millennials are actually more cost-conscious and careful about making big purchases than previous generations. So, if 1 + 1 = 2, Millennials would be doing DIY work like there’s no tomorrow, right? Whatever cultural spin (i.e. they’re lazy) you want to put on it, 1 + 1 = 4 for Millennials who want to save money while not doing their own repairs. If you run a business, big or small, you should smell the money grab on this one.

As discussed earlier, Millennials make trust-based decisions. They’re not likely to give repeat business if they feel like they’re “just a number.” One way to get business is to make sure Millennials trust you enough come to you when something happens with their vehicle. To build that trust, it’s a great idea to offer customer education classes and workshops once in a while. Teach young people how to change a tire, do their own oil and establish a vehicle maintenance schedule. There’s so much power in that, and you don’t have to be a major establishment to make it happen. Not to mention, it’s not a cost-heavy deal, and it only takes a few hours of your time.

Since it’s 2016, no matter the size of your shop, there’s no excuse to not have a website. When people Google the nearest car repair shops in your region, they’re going to get a list of shops, a Yelp page and the actual websites of the local companies, among other ads and listings. If you’re second on a list of the “Ten Best Auto Shops in Pasadena, CA” but don’t have a website, you look unavailable and suspicious to younger shoppers. You should have a personalized, well-designed site that you’re willing to put a little money into doing the right way. And just to reiterate, don’t just make the crappiest-looking web page you can and think that’s enough. If your layout, spelling and contact information isn’t professionally handled, you risk doing harm to your business by looking lazy. So in other words, the Millennials we may criticize for being ignorant about their cars will be just as critical of a company with a sloppy online presence. It goes a long way if potential customers, young and old, can easily access your hours of operation, contact info, parking information, deals you’re running, etc. A good website will also help you compete with the larger establishment chains (e.g., Firestone). At the end of the day, we don’t want to see our lovely four-post lifts go to waste in empty garages and service bays across the country.

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Chapter 5: Making Up
For the record, we think Business Insider and its author are both great. We just happen to disagree with this idea that there’s something “wrong” or “broken” about the Millennial generation. It’s a complex world: there was the Great Recession, cars are expensive and most members of this demographic are in their 20s, still figuring out who they want to be. Tap into their mindsets, market accordingly and help them along rather than criticize them. You’ll probably make more money along the way.

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