The auto industry is enjoying a successful year with headlines centered on consumers coming back into the new car market after delaying their purchases following the Great Recession. But last month, Edmunds.com Chief Economist Dr. Lacey Plache examined the car-buying landscape and identified three different socioeconomic groups that have been slow to get back on the new car wave:
1) The Young and the Restless (young adults age 18 to 34)
2) The Subprime Lineup (consumers with below-average credit)
3) The Incomers (those who earn less than $50,000/yr)
Dr. Plache's analysis outlines how these consumers found themselves in the snare of pent-up demand and some of the obstacles that have kept them from diving in. Fortunately, for at least two of these groups, dealers and manufacturers have started to find ways to get them back into the market. For the "Subprimers," credit has eased significantly to the point that the average credit score for new car buyers is back to levels seen shortly before the recession hit with full force in 2008. And for "The Incomers" the number of new car options starting at under $20,000 is back on the rise after bottoming out in the 2011 model year.
But "The Young and the Restless" are proving to be much trickier to entice back into the new car market. According to Dr. Plache's research, the market share of new cars purchased by young adults aged 18 to 34 was 30 percent lower in 2011 than in 2007, which can be an issue since this demographic has proven to be the sweet spot for the trend-setting culture.
"The biggest key to getting young drivers back into the market is sustainable employment," said Dr. Plache. "Until more long-term jobs that pay reasonable wages are created for the younger generation, we can't expect them to be a force in the new car market the way their predecessors once were, especially as they struggle to pay off crushing student loans."
But that doesn't mean that dealers and manufacturers shouldn't suspend their marketing efforts targeted at young buyers. After all, many young adults who have been fortunate enough to sidestep economic landmines are still ready to buy now, and these customers can be the biggest influences on their friends once they are ready to enter the market. Winning over your customers' hearts and minds at an early age is the first step toward building brand loyalty in future transactions in (presumably) better economic times when the customer's purchasing power will only grow.
So what kind of sales and marketing strategies can dealers and manufacturers use to help get young buyers off the sidelines and back into the game? Here are a few ideas:
1) Market to Parents
One recent study found that 55 percent of recent college graduates report that their parents chip in for at least some of their living expenses. And if parents are helping to buy a new car for their children, it's a good bet that they'll have strong input on exactly what that car will be. So what do parents look for in a car for their kids? Edmunds.com found that parents consider three categories above all else: safety, reliability and cost to own. And there are plenty of vehicles that hit most or all of these checkmarks. Edmunds.com's Best Cars for College Graduates identifies some of the more popular selections within the last year.
2) Exposure on College Campuses
Colleges are terrific settings to expose your brand, even if most students won't consider a new car purchase until after graduation. One way to get these potential customers behind the wheel is through car sharing services like ZipCar and Hertz On Demand (ZipCar claims to provide vehicles on over 250 college campuses nationwide). Test drive events are also popular ways for students to sample a new car. Local dealerships might also consider less expensive (and more logistically painless) options like sponsoring on-campus festivals and concerts or work with local restaurants to sponsor free food stands in the quad at lunch. After all, few things are more popular with college students than free pizza or hot dogs.
3) Hire a College Student
So you've made the smart decision to market your brand to a college audience. Just remember that the messenger is almost as important as the message. That's why college students can be valuable brand representatives. Not only do peers have an easier time breaking through to younger audiences, but the inherent word-of-mouth buzz that college students can generate within their networks can be a strong bonus.
4) Target Your Social Media
By now it's no secret that a strong social media presence is important for all businesses, especially for those looking to connect with younger tech-savvy consumers. But they too often overlook some simple steps to maximize online exposure to young crowds. Social media is all about harnessing enthusiasm for your brand and there are few times when a shopper is more excited than the moments after they've purchased a brand new car. So, dealers should arm sales teams with cameras to take pictures of these buyers with their new cars in front of the dealership sign and immediately upload them to share on Facebook and Twitter. Dealerships should actively seek out testimonials from their youngest buyers and promote them on their websites and Facebook pages. Social media contests and sweepstakes ("RT this message to be eligible for a free tank of gas, compliments of Smith Motors") can also help a dealer's brand go viral.
5) Partner with Other Businesses
If you have trouble drawing younger crowds to your brand, it's always smart to associate yourself with businesses that rely on Gen-Y. The popularity of food trucks, for example, is exploding nationwide, especially among the 20-something crowd. One interesting trend we've seen near our Santa Monica headquarters is food trucks invited to set up at the curbs of local businesses, including some car dealerships. By strategically parking an eye-catching sports car at the edge of your lot next to the Pot Luck Truck, you can easily grab a captive audience as they patiently wait for their food orders.
Edmunds.com is committed to helping participants in its Direct Dealer Program build best practices and target car shoppers across all demographics. Find out more by contacting 1-855-EDMUNDS or firstname.lastname@example.org.