When it comes to buying automobiles, Generation Z will be practical, budget-conscious and safety-oriented, Cox Automotive said today.
Kelley Blue Book and AutoTrader, both Cox Automotive companies, conducted a study of the future car-shopping habits of Gen Z, now ages 0 to 17. The study included a survey of 3,000 respondents, about 1,200 of which were 12 to 17 years old.
The youngest generation currently makes up 23 percent of the population, and its purchasing power is expected to reach $3.2 trillion by 2020, Cox Automotive said in a statement.
“One key difference between this generation and their predecessors, the millennials, is that they are far more budget-conscious than the millennials were,” Isabelle Helms, vice president of research and market intelligence for Cox Automotive, told Automotive News this week.
Nearly 60 percent of Gen Z consumers surveyed prefer to save money over spending it, and they’re concerned about student loan debt, the economy, unemployment and poverty.
“All of that really comes together to significantly impact their decisions around vehicle purchases,” Helms said. “They were the generation that watched their parents go through the recession. They have a different appreciation for money than their older counterpart. I think that’s a very distinguishing characteristic for them that sets them apart.”
Vehicle brands they identify as more traditional, trusted and practical, such as Ford, Chevrolet and Honda, appeal to them most. Conversely, when millennials were surveyed as teens, they gravitated toward Audi, BMW and Mercedes-Benz, Helms said. A car represents freedom and convenience to Gen Z respondents rather than a reflection of who they are.
“The car is the gateway to experiences for them,” Helms said. “Experiences matter to them far more than materialistic things, which differentiates them from millennials.”
In the market
Gen Z consumers are cost-conscious, but they are extremely willing to buy a car. Ninety-two percent of Gen Z respondents own or plan to own a vehicle, and 97 percent have or plan to get a driver’s license, the study found. Most Gen Z respondents, 72 percent, said they would be willing to go without social media for one year if it meant they could own a car. More than 60 percent would give up new clothes, and 33 percent would part with their cellphones for a year to have a car.
For them, “the benefits of ownership far outweigh the benefits of car-sharing,” Helms said. “Vehicle ownership is more tailored to their needs. It’s more convenient and flexible.
“This is the generation that will do the math and figure out what will save them money ultimately, but if they are suburbanites and need to travel to work every day, it will probably be more cost-effective for them at this point to own a car vs. ride-sharing.”
In some cases, that means investing in an environmentally friendly vehicle. More than a quarter of Gen Z respondents said owning an environmentally friendly vehicle is important, but it was the cost savings that shaped their opinions. Forty-three percent of Gen Z respondents said a vital factor in buying an environmentally friendly car was saving money on gasoline, while 30 percent said trying to lessen global warming was important to them.
Gen Z also prioritizes safety more than older generations. Of the Gen Z respondents, 43 percent said they value safety features compared with 25 percent of millennials surveyed as teens. Only 11 percent of Gen X and 9 percent of baby boomers valued safety as teens. Safety features are more important to Gen Z than infotainment, the study found.
More than half of the Gen Z respondents said fully self-driving vehicles are appealing, and nearly half want most cars to drive themselves in the next decade. But that desire is driven by safety: 61 percent said they think self-driving vehicles will make the road safer, 45 percent said it would ease their concerns about distracted driving, and 41 percent said self-driving vehicles would prevent accidents.
New marketing approach
Dealers and automakers have honed their sales approaches to appeal to millennials, but what has worked for millennials won’t necessarily work for Gen Z, Helms said.
While they are likely to do excessive research online, only 26 percent of Gen Z respondents said they would purchase a vehicle online, and 68 percent said in-person interactions are important to them. More than half, which is relatively consistent with other generations, said they would like to test drive a vehicle at least twice before buying it.
Gen Z buyers digest information in bite-size pieces, Helms said. “They are accustomed to consuming information in bits and pieces. They’re also very highly visual, which is why Snapchat is such a popular app and why Instagram is in the midst of overtaking Facebook for many of them.”
She suggests marketing to Gen Z with creative, visual pieces that have just a few words that resonate with them.
“Tell your story as a brand across multiple screens,” Helms said, adding that Gen Z typically relies on four to five screens. “They hardly make a decision without seeking the guidance of their friends,” so integrate social media with selling strategy, she said.
“Then talk to them about value. That’s what will resonate,” Helms said. “Value and safety are two very important characteristics for them.”
Realism pushes Gen Z to reject perfection, Helms said, while perfection ranked high with millennials. Gen Z prefers seeing average consumers in ads over celebrities. But like millennials, they want brands to be “authentic and humble.”
“They want brands that give them control,” she said. “They like to be a part of the process.”