Sustainability focus make Gen Z, millennial buyers prime service contract customers

An overwhelming percentage of Generation Z and millennial shoppers expressed interest in a vehicle service contract, Ally reported this year.

A survey of 2,000 adults found 81 percent of shoppers age 18 to 40 were more inclined to buy the product "due to the pandemic," Ally said in announcing the results in March.

But a desire among that age range for sustainability might also drive service contract sales, according to Gabriel Garroni, Ally Insurance senior vice president of sales.

The Ally research, conducted in October 2021 by One Poll Survey, found 71 percent of the 18-to-40 demographic said they'd rather buy a used vehicle than a new one — and more cited sustainability than price as a reason for their decision.

Eighty-four percent of consumers in the18-40 age range also thought items they use daily should last at least 10 years.

"It plays well in our business," Garroni said of consumers' interest in sustainability. Those who desire to keep vehicles longer to lessen the environmental impact should consider buying F&I coverage, he said.

Dealerships should think of sustainability as a driver of F&I sales, Garroni said, "not make the assumption ... that it's just a budgetary issue, but it's more about extending the life of that vehicle."

Budget still matters to the 18-to-40 shoppers, with 46 percent citing affordability as a reason to buy a used vehicle. But Garroni said he felt those buyers would be willing to pay more upfront to buy a service contract so they could keep the vehicle running longer and reduce their environmental impact.

"I think that's a trade-off that these buyers are really demonstrating in this survey they're willing to make," he said.