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Steve Schmith, Automotive News: Hi, everyone, this is Steve Schmith with Automotive News. Welcome to episode five of the All Ears podcast, a 10-part series sponsored by Ally and produced by the Automotive News Content Studio that is designed to explore topics that are disrupting and reshaping the automotive industry. In each episode, we delve into topics important to executives working in automotive retailing and gain insight and perspective from some of Ally's best thought leaders, who also share their recommendations on how dealers and others can navigate transformational changes underway. Our objective is to provide actionable insights that you can use immediately in running your business and offer perspectives to help inform your business decisions. In this episode, we're talking about GenZ consumers. Yep, some of them are old enough to buy cars and what that means for dealers is important, particularly among a set of consumers who grew up on the Internet who often make buying decisions based on how companies serve their communities and the environment and who, at their young age, are often influenced by older family and friends and vehicle shopping experiences they have had throughout their lives. Navigating all of that can be complex. So today we're catching up with Ashley Spring, Director of Research at Ally and 2021 Automotive News 40 Under 40 honoree Allie Peters, who runs the service department at BMW of San Antonio. They say Gen Z consumers do bring different experiences and expectations to the car shopping experience. But they also say some of the traditional ways dealers connect with consumers still matter. They also say that preparing for Gen Z consumers and the experience they expect can also have a positive impact on older generations. How? And beyond attracting Gen Z consumers, how can dealers also attract them as employees? Here's my conversation with Ashley Spring and Allie Peters. Ashley and Allie, thanks so much for joining me today on the All Ears podcast. How are you both.
Ashley Spring, Ally: Doing great!
Allie Peters, BMW of San Antonio: Thank you.
SS: Well, thank you for joining me on this continued collaboration with Ally and the All Ears series. This is episode five, and of all the episodes we've got lined up, this one's really exciting because I think we're finding ourselves in a situation in the automotive retailing market where you have four generations that are out there buying vehicles. You have Boomers, you have X-ers, you have Millennials, and now you have this emerging generation of young consumers that many refer to as Gen Z who are now moving into buying, moving into their more mature consumer years. From your observation, and Ashley, let's start with you, how is this generation different from other generations that have preceded them?
AS: Yeah, and this is such a critical thing to think about. And your idea around, like "we're really servicing for different generations now" is so important. And I think I really want to take that step back and just start with, like, why are we talking about generations? You know, I think we all have these conversations and think about some of the conflicts that we start to see, like, "OK, Boomer" and Gen Z attacking Millennials' skinny jeans and those types of things. But it isn't just the conflict that I think is so important. Generations really are set up based upon the societal events that have an impact on this core group of people. So, for example, you're talking about Gen X-ers. They're really tied together by being latchkey kids and the Challenger explosion. And, you know, I kind of move between being an X-er and a Millennial, depending upon whose definition we're using. But, you know, I can clearly remember the excitement of a teacher going into space and just that overwhelming tragedy of the moment as well. So seeing that shuttle exploding was such a defining moment for me. And that's such a critical thing. When we really think about generations. You know, we think about millennials, they're iPods and Harry Potter, 9/11 and the financial crisis. So, lots of things that are going on that really define who they are. When it comes to Gen-Z or the Centennials or however you want to reference them, their societal events really include being mobile natives, and I think that's really important as we start to think about how to work with them and what their expectations are. And that includes growing up not just with an iPad, but social media and content and really tech at their fingertips. I mean, they turn to YouTube and TikTok, not just for the entertainment side, but also for education. You know, there's other societal events that have also impacted them. And I think it's all the stuff that we see on the news every single day. And that's the those massive things like MeToo, Black Lives Matter, climate shifts and even COVID-19 is really going to have a huge impact on this generation.
SS: So, Allie, from your view as working in a dealership every day, what's also interesting to me, and I don't think this has changed, is that what influences many consumers' decisions to buy is what they hear from friends and family. And in the situation where you have four generations and you have the Boomers, the X-ers that perhaps were conditioned to have experiences where the dealer experience was not so well, it was not so good. And the leaps and bounds that I think dealers have made through all sorts of efforts to change the perception of what the dealership experience is, how do you navigate all of that with a consumer generation that's different to all the pieces that that for all the reasons that Ashley just points out, but then are being influenced with friends and family that might have entirely different perceptions. How do you navigate all of that?
AP: So that is a constant, I guess, challenge, but also in something that's exciting for us as a team. So I am on the service side and I find that with the group of people that we're working with on any given day, that we have to be able to provide information that is not only honest and transparent, but shareable as well. And so, one of the things that we do and we are huge fans of that we've done over the last few years is, we've incorporated technician videos. So vehicles come in, our technician gets it in the shop, and we are able to show why the car is acting the way it is currently and what we need to do to repair that. And then that is something that we can send. So if it is a 16 year old bringing their car in, they can ask mom or dad or they can send it to a friend. If it is a thirty five year old, they can send it to a partner at home or a parent or another friend or we even have, talking about multiple generations, my parents receive videos and they send them to me and say, "Hey, this is something that we should do?" And I think that goes to being able to attract every type of person, every age and gives us the ease of explanation and communication.
SS: Well, it meets the expectations that the younger generation has, but I would imagine some of that is also a continued effort to change perception among older generations. So you're kind of tackling both through that approach.
AP: I completely agree. And I think that that's also there's that feeling that car dealerships are shady or the stereotypical salesperson and they're going to sell you something they don't need. I think that's something that every single day we are actively working towards changing that perception and being a true culture of integrity and doing what we need to do with the guest and then being a partner with us versus a person who we're just asking to buy from our store.
SS: Ashley, Allie brought something up a few minutes ago that I thought was interesting, and that's this notion of how important trust and ethics are and what companies are doing to make an impact on the environment, on on sustainability efforts. How is that affecting consumers, particularly young consumers, choices relative to who they do business with?
AS: These are the people that are really challenging the norms and they're pushing back on brands. They are really coming at it in terms of "If your brand doesn't match my personal values, I will not work with you." And so there is a level of expectation of they will stop working with a company, they will go to a new company, they will search out different groups to find these groups that actually match with their values. But the other thing is that they also hold themselves accountable. So it was really interesting starting to look at this idea of four out of five centennials expecting businesses to have a positive impact on society and the environment. But then also, like nearly 80 percent of Gen Z-er's agreeing that it's important that others see them as someone whose integrity is beyond question. So it really is. It's not just like I expected this of everybody else. It is a personal reflection as well. And I do think that, again, these are natives to digital and they are going to be the ones that are posting videos and commenting about experiences out in social media. And so, it is a reflection of who they are with the brands they work with as much as their own personal value. So this is I mean, this group really is kind of changing that broader marketplace in terms of not just who they are as a company, but who they even want to work with. I mean, we start to look at it from an employee perspective as well in terms of "I don't want to work for a company that doesn't share my values." So I do think that it is a really huge shift that this generation is pushing forward on, that it's going to have just long lasting impacts across the board.
SS: Thanks for listening. We'll be right back with more.
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SS: Allie, from your perspective, what is the dealership that you work at, how are you all going about attracting younger employees? And any perspective, any insight on how working together between all sorts of generations at the at the dealership works best? What are things that that perhaps dealerships need to do differently to create this, you know, this this harmony among workers of different generations?
AP: So one of the biggest focuses we have is building the culture that we are proud of and not only internally, but as we're talking about just that transparency, one of our guiding principles is to hire great people with integrity. And so, I think one of the things that we have seen over the last five years, with a huge focus on this, is that by finding great people, you can actually, on your own, you can start to attract and bring in even more great people. And so, for example, we have a very large support staff on our side. We're a very large dealership and we have almost 20 associates that work in our valet transportation support team here. And in the last five years, with that being our focus, we have actually found that almost every single new hire in that team has been a referral from a friend who came and started to work with us in the last five years. And that is that Gen-Z group. We have college students. We have about half of the staff, this is a great college job for them. And they graduate and leave and move on to a different career in a different industry. And then what we found is that half of the staff on that team have used that position as a springboard into a career in this industry. And going to the question about how do we do, how do we work with different generations, I sincerely believe if you have the right people in your team and the right people on your bus, so to speak, that age doesn't become as big of an issue or as big of an obstacle because you see what the vision is and you see where we're headed. And everyone understands that and is moving towards the same direction.
SS: Ashley, what are your perspectives on what dealers should be thinking about relative to digital purchasing experiences and really engaging with younger Gen-Z consumers?
AS: I kind of look at it from the perspective, obviously, a dealership is very different than a retail model, but how much things have shifted in retail, even just during COVID-19? It's all about the options now. So I can come in a store, I can pick it up at the store that's either in the building or somebody bringing it up to my car to me. And if I don't want to do that, I can order it online and have it on my doorstep in two hours. I mean, it's just whatever is convenient for you. And those experiences are really driving those expectations for auto purchases as well so if I can put in an order and come and pick it up in two hours, why can't I do the same thing when it comes to purchasing a vehicle? So I think it really is this 'omni' aspect and this just wealth of options that is our better opportunity with Gen-Z as opposed to just one model that's going to fit for everybody.
SS: Allie, I'm curious, extending on what Ashley just said and extending that into the service bay: If I'm a young consumer and I'm coming in to get my vehicle serviced, I'm just curious if you all are experimenting with actually implementing or thinking about that moment and understanding what that consumer perhaps test drove and did not buy that might lead to increased customer loyalty. "Hey, you're bringing your car in for an oil change. We saw you test drove this vehicle as a loaner. We're going to have this vehicle that you did not buy available as a you know, while we're fixing your car." Are you all experimenting, thinking through those types of of service experiences?
AP: So, yes, and no. To piggyback on what Ashley said, I completely, wholeheartedly agree that it's all about the options for our consumer and for our guest and that our goal is to allow them to go as far as they want digitally. We offer pickup and delivery. We focused very heavily on that during COVID to allow the guests to stay comfortably in their home and to reduce the number of bodies that we had here in the dealership and yet to continue to run our business and provide for our technicians and our staff. And we've kept that up. We do deliveries as far as two and a half hours away and can work that into guest's schedule in ease of convenience. Now, in terms of the idea of being able to allow a guest to test drive a different loan car, I think would be something that we have done, pre-COVID and would love to get back to. But what we are currently experiencing is inventory is extremely hard to get and the loan car fleet we have we are asking for grace from our guests because our goal right now is to provide four wheels for them. And that is what we're working towards. And we do hope to see that change, but going from the fleet we had pre covered we're just roughly at about 50 percent of that. And we've had to get creative on how we can still provide that service for our guests because they purchased knowing that that was something we offered. And while we don't have the inventory, that doesn't change their expectation from us.
SS: OK, let's close with what I think is a question that many folks might have relative to this younger generation. Is are they more interested in buying or are they more interested in ride sharing and those type of other mobility choices? So Ashley, what are you seeing relative to young people and their feelings about owning, driving and maintaining a vehicle of their own?
AS: What's different about Gen Z is that they are looking for something unique when it comes to their next vehicle. I think this is, again, where we start to see some of their values coming back up. They are the group that are most likely to consider a hybrid or an electric vehicle. All these these things, again, it's a small population. There's still going to be a ton of people that drive gas vehicles for a while still. But there are expectations. And again, they're really pushing those boundaries. We talked about maintenance a little bit as well. This is a concern for this generation. Again, they're working towards some financial stability and their lives aren't set up. So I think there's a lot of concern about actually being able to cover the cost. I do think that as they come in, they are going to be evolving into driving more. So I don't think we have to be overtly concerned, but those expectations are just going to be different for the type of vehicle and then really helping them to understand how they service not just those newer types of vehicles, but how they manage it in their finances as well as they kind of start to build up those life stages.
SS: Allie, Ashley, thank you both for joining me today on the All Ears podcast. Appreciate you spending some time with us and sharing your perspectives on what this younger consumer generation means for dealerships around the country.
AP: Thank you, Steve.
SS: That's episode five of the All Ears podcast. Join us next time when we'll talk about the changing digital marketing landscape and how dealers can harness the power of social media and other digital tools. On behalf of Ally and the Automotive News Content Studio, thanks for joining us.