Millennials Are The No. 1 Car Buying Demo In America.
To garner a larger share of automotive ad dollars, radio groups should play up their ability to reach and engage with Millennials, now the No. 1 car buying demographic in the country. “Millennials are taking over the industry,” says Tyson Jominy, VP of Data & Analytics at J.D. Power. This marks the first generational shift since Baby Boomers grew into car buying age in the 1960s and have dominated auto sales ever since.
In a word, Millennials have “arrived,” Jominy told Radio Advertising Bureau members huddled in front of their screens Wednesday for “Radio Works for Automotive,” the trade group’s latest online presentation. “It took them a long time to come into their own.” But now hordes of Millennials (born 1981-1996) have gotten a handle on their student loan debt, are moving to the suburbs, having kids and snapping up SUVs and three-row minivans in droves. Vehicle purchases by Millennials year-to-date in 2021 exceeded Boomers for the first time ever, increasing 24% over the same period in 2019. With 1.55 million vehicles purchased in 2021 so far, Millennials blew past Boomers who bought1.41 million. Gen X remains the third largest car buying cohort with 1.15 million in purchases, up 13% from 2019.
“You’re targeting Millennials and we need to reach Millennials with messages they understand,” Jominy told the RAB crowd. “They have different expectations. They may not be purely motivated by the deal. Other factors and channels will influence their buying – environmental, social media… It’s a radical change that we haven’t seen in the industry since the 1964 and one-half Mustang launch.”
Another top takeaway is the importance of ad sellers using data to make their pitches to dealers. Radio ads have been shown to generate a robust 8% increase in visitors to auto dealer websites, and also influenced 1.1 new users per day, according to a study by Numeric Owl. But not every dealer knows how radio influences search. Dick Parrish, Dealership Management Consultant for the National Automobile Dealers Association, said he was unaware of these stats until reviewing RAB materials prior to the webinar. “That is a message you can take to a dealer and impress them.” Parrish also pointed to RAB-furnished research showing auto intenders exposed to dealer ads on AM/FM radio had an 82% higher consideration for those dealers than those unexposed to the radio spots. While dealers have used radio to plug sales events and for branding, consideration is just as important. “We’re looking for them to just consider us, to be able to search and see what were all about,” said Parrish who also implored radio to help dealers produce better ad creative. Proving its ability to drive auto intenders to dealer websites is one way radio can get the attention of dealers when so much of researching, selecting and buying vehicles has shifted online.
But it’s not just the buying process that has changed. The auto business today is a “radically different industry,” Jominy said. Retail sales volumes are up 13% over pre-pandemic 2019, while dollars spent have shot up 27% due to higher vehicle prices. Combine the two and retail profits have doubled since 2019.
SUVs continue to be where the action is, accounting for 60% of sales. Car sales are now only 20% of the pie with the rest belonging to trucks.
Meanwhile, sales of vehicles priced under $20,000 have “collapsed,” Jominy said, as the growth has shifted upwards. “Once you get beyond $40,000, things are taking off. The biggest growth is in the $80-90,000 market where sales are up 122% over 2019 levels.
In April sales were robust at 1.54 million total units sold, up from 1.32 million in 2019, even with inventory levels at their lowest since 2011 when the industry was still pulling out of the Great Recession. “It’s extraordinarily tight out there right now,” Jominy said.
So with profits doubling and customers paying above sticker price to make sure they get a vehicle, why should dealers keep advertising?
“Right now, pulling out of advertising would be the worst thing you could do when there’s heavy demand,” Jominy argued. “You need to keep reminding them that if you pull out, if you go dark, when vehicles do come back, why would consumers think about you?
“You have to keep investing [in marketing] and it will pay off down the road,” Jominy continued. “Sometimes it’s immediately, sometimes it’s a longer term play. Demand is high and if you’re not there, you’re invisible and someone else will get that sale when there’s inventory.”