4 Ways the Millennial Mindset is Shaping the Auto Industry
It may not exactly be breaking news that millennials have officially bypassed the baby boomers as the largest generation making up the U.S. population—that landmark came to pass in 2015 as—but a noticeable impact of that generational shift is beginning to emerge in the aftermarket.
In a recent report aftermarket analyst Jim Lang noted that, indeed, as millennials (born between 1985 and 2000) begin to steer more and more spending power in the automotive market, a shift in values will significantly impact the dynamic between shops and the customers that sustain their business.
“Millennials have a number of values that differ from those of the baby boomer generation, some of which will have significant aftermarket implications,” Lang wrote.
Marked differences noted in the report include a general lack of love for the automobile compared to past generations (baby boomers couldn’t wait to get a driver’s license while millennials studies find millennials actually delay driving), a major difference in the way buying decisions are made (with online research at their fingertips, millennials are less likely to be the loyal customers baby boomers typically are), a lack of hands-on knowledge (a millennial’s automotive understanding typically comes from online resources, rather than physical experience with repair), and the importance of price (millennials are the first generation in recent U.S. history to enter adulthood in worse economic shape than their parents).
To better understand how these value shifts will impact day to day shop life, Lang shares a few key takeaways.
In studying this generational shift, what do you find to be the top takeaway for shop owners?
It won’t surprise anyone, but millennials are digital natives. They grew up with computers and see them as a resource much more than baby boomers do, so when they approach any purchase decision, their first move is to go online. That’s a 180 from the face-to-face purchasing decision shop owners could rely on from baby boomers and that takes some power out of an owner’s hands.
What you’re really seeing here is an evolution of the relationship between consumers and service outlets. The millennial consumer isn’t looking for a direct relationship with a shop, they’re looking for a relationship with a platform, which totally transforms how shops will acquire the customers of the future. The faster owners can grasp that, the better.
What should shop owners be doing to prepare for that shift?
It’s time to build a stronger web presence beyond having a website. Online advertising, especially on a zip code basis, is a strong move, but they’ve got to reach out to millennials where they are because these customers are not going to seek out their shops.
This evolution also puts dealers, who have the resources for a much bigger presence online, at another advantage over independent repair shops.Younger generations are not only seeking out repair shops less, but they’re also opting for used vehicles, certified vehicles and leases rather than buying new. They want the benefits of a vehicle without the responsibility so dealerships are getting that added touchpoint.
To make up for that, shop owners really have to learn how to meet the millennial consumer halfway. They may come in with preconceived notions of what’s wrong with their car or what it should cost so there’s going to be some increased tension between millennial expectations and repair shop realities, but it’s the shop that’s going to have to educate and diffuse.
When do you expect this shift to become the new normal?
Millennial consumers and they’re buying habits have had an impact for a while now, but as those dollars begin to make up more of a shop’s revenue the shift will be past the point of no return.
If you talk to independent repair shops, it's not unusual for them to have a millennial walk in with a part and ask them to install it. That “install it for me” aspect didn’t really exist even three or four or five years ago.
Over the next two or three years, that shift could be accelerated by operations like Openbay or Amazon as the retail giant likely expands its services in the auto aftermarket.
This isn’t a moment where you can say “Well, let’s wait a couple of years and see how this shakes out.” Owners really should have started yesterday. It's going to take a couple of years just to get up to speed on and build up that web presence and reputation with millennial customers, so it’s going to be a learning process and you want time to prepare and do it right.