Millennials represent over 20% of the US population and control over 1 trillion dollars in direct buying power. 80% of them intend to purchase a car in the next five years, thereby having a huge impact on the overall automotive market in the US. We have provided below a detailed overview of the online car buying journey of millennials, along with relevant statistics.
Millennials Online Car Purchase Journey
Sources of Information
- As per data from Auto Trader, nearly 82% of millennials use third-party research as the top source for their car purchase decision. These third-party research sources can include anything from specific car shopping websites to non-automotive publications to social media channels, auto review sites, blogs, and forums.
- Social media has a prominent influence on the car purchasing decisions of millennials. As per a report from Digital Air Strike, around 77% of car buyers and 55% of service customers clicked on a Facebook ad because of an offer or promo indicating that social media advertising has an impact on their decision-making. A recent report by Deloitte highlighted that social media influences the purchase decisions of nearly 47% of millennials in general.
- According to CDK Global’s Millennial Car Shoppers report, 62% of millennials use the dealership websites as a key source of information during the car purchase research process. This is significantly higher than 38% of millennials who use original equipment manufacturer (OEM) websites as their primary source of information for car buying.
- The report also highlights that word of mouth from friends and family is the second most trusted source of information for millennials and this is also how they are most likely to be introduced to a new car. Nearly 43% of millennials use word of mouth as their source of information for purchasing a new car.
- Additionally, nearly 53% of millennials use personal searches to determine the car they want to purchase. Nearly 88% of millennials use the internet to search for the car they wish to purchase online.
- Alternatively, nearly 40% of millennials use traditional media sources such as print media to learn about or research different cars.
- According to data from Autoweb, 65% of the US millennials reference their smartphones before making a vehicle purchase and expect a smooth, informative experience when they start the online car-buying journey on a mobile device. Additionally, 48% of mobile-first auto consumers are millennials and 45% also use a tablet or smartphone during the car-shopping process. Hence, dealers and other third-party websites that are not optimized for mobile engagement and provide a poor mobile experience are a major pain point for millennial car buyers.
- As per a 2015 CDK Global report, slow website load time is another pain point for online millennial car buyers. The report highlighted that a majority of millennials wouldn’t wait more than five seconds for a page to load on a mobile device before they begin to feel the pain and move away.
- Additionally, the report indicated that the lack of mobile optimization, interactive website or mobile features, and quality photos were among the top pain points about online car buying for millennials.
- Further, according to MTV’s research branch, 80% of millennials believe that buying or leasing a car should take less time, 71% believe that ratings and comparisons among vehicles are unclear, and 87% of millennials want the car buying process to be more transparent from start to finish, not just about pricing but about every aspect of car purchase.
- Some other pain points of online millennial car buyers include inconvenience in setting up test drives and inconsistent vehicle information such as packages, pricing, and inventory across different sites.
Key Decision-Making Factors
- Affordability plays a significant role in the millennial car-buying journey. According to the CDK Global report, millennials say they don’t own a car due to purchase and maintenance costs and are more likely to buy a car if it is financially feasible for them.
- Also, since millennials are digitally and technically savvy, having advanced technology in their vehicles also plays a key role in online car purchase decision-making. Nearly 75% of millennials consider technology features such as navigation, Bluetooth connection, safety, and phone connectivity as must-haves in their vehicle. Additionally, 72% of millennials desire features like satellite radio and MP3 player. As per Auto Web, 89% of millennials are willing to pay more for these improved vehicle software features.
- Millennials place a high value on individuality, and this plays an important role in their online car purchase decision-making process. Nearly 33% of millennials want a car that stands out, and 48% want a car that reflects their personality. Also, around 50% of millennials are willing to pay more for cars that are consistent with their image.
- As per a Duff & Phelps survey, fuel-efficiency is another vital feature that American millennials take into consideration while purchasing a car. Brand Reputation, speed, and size are some other factors that go into the decision-making process.
- While the information regarding the exact point when online millennial car buyers pick the car they want was not available publically, similar information for offline buyers indicates that 48% of millennials intend to buy a car on their first visit to a dealership. They have done their research and know what type of car they want by the time they visit their chosen dealer.
Time Spent on Research & Number of Cars Compared
- According to the data from AutoTrader’s research, millennials spend more than 17.6 hours researching their vehicle before making a purchase.
- The research also highlighted that the most prominent reason behind such a large research time-frame is that 71% of millennials want to be aware of all possible vehicle choices before going ahead with their final car purchase. This is more than Gen Xers or Baby Boomers.
- While the data on the exact number of cars compared by millennials before making an online purchase was not available in the public domain, research from JD power indicates that Gen Y and millennial consumers consider a wider range of vehicles during their research than other generations.
- Additionally, as per data from V12, millennials tend to take longer than other generations to decide on what car to buy. They take an average of 16.9 weeks to make the purchase decision as compared to 15.7 weeks taken by Baby Boomers.
- As per an example from Google, a single millennial user made over 900 online interactions before deciding to purchase her car.
Other Useful Information
- As per CarGurus’ 2019 Buyer Insight Report, 60% of millennial car buyers want to complete at least one part of the car-buying process online.
- According to FICO research, millennials still prefer to purchase a vehicle at a dealership, although online channels are becoming increasingly popular among millennials. The research indicated that while indicated that 82% of millennials prefer a dealership, 59% of them would consider buying a vehicle from another consumer on sites such as AutoTrader, Craigslist, and eBay.
- The research further indicated that 19% of millennials prefer a credit card to buy a new automobile even if it meant paying high-interest rates, 20% prefer to finance a car through a dealer, 27% like to leverage banks and credit unions, and 34% prefer to use cash to buy a car.
- Also, poor credit scores are a big stumbling block in the online car purchase journey of millennials. Nearly 43% of millennials have poor credit scores, which implies they most likely do not qualify for traditional loans or financing to purchase a vehicle.
- According to the Autolist survey, the top 10 brands that appeal the most to millennials include Chevrolet, Ford, Honda, BMW, Toyota, Dodge, Jeep, Audi, Nissan, and Tesla.
Online Car Buyer Customer Journey: Gen Z
- Gen Z is the generation born after 1996 and grew up using the internet. The purchasing power of the Gen Z is around $3.2 trillion.
- The industry insiders describe Gen Z as practical, frugal, and tech-savvy. The perception further enforced when Lending Tree reported that “only 36% of Gen Z have an auto loan“.
- A study from Urban Science, where they surveyed 2,000 car shoppers and 200 dealers, revealed that Generation Z visited the highest number of brick-and-mortar dealerships compared to any other generations. The average number of dealership visits for Genz was 3.8 stores, where it was 2.4 for Generation X and 2.1 for baby boomers.
- According to AutoTrader and Kelley Blue Book, “92 percent of Gen Z own or plan to own a vehicle, and 97 percent have or plan to get a license.” Of those surveyed, 29 percent responded that a car represents freedom and 29 percent responded that it’s a convenience.
Research and time spent researching
- According to an industry expert, “their (Gen Z) top influencers are still their family and online influencers, and they check ratings and reviews digitally.”
- Car buyers, in general spend, 14:44 hours getting a car and spend 8:42 hours researching online.
- The most used sources by car buyers were third-party sites (78%), and 57 percent of them used dealership sites.
- While a car being green or environmentally friendly is important to Gen Z, 77 percent of them responded that price is the most important factor when purchasing a car.
- According to a study from Kelley Blue Book, “When Gen Z was asked their opinion on environmentally friendly cars and important factors in selecting a vehicle to buy or lease, 43 percent say these models mainly save money on gas, versus 30 percent who say those vehicles prevent global warming.”
- Moreover, for Gen Z style and brand is a less important factor, and they are more focused on the safety features of cars.
- While the importance of style and brand rated at 57 percent and 34 percent respectively for Millennials, Gen Z rated those at 49 percent and 23 percent.
- This generation appears to be more conservative and skeptical about new technology than the previous generation. Only 26 percent of them is willing to buy a car online in the future. And more than half of Gen Z said, “they need to test drive a vehicle two or more times before making a decision.“
- Mistrust in technology is likely a pain point when it comes to buying a car online, with 68 percent of “Gen Z agreeing that face-to-face interactions are important.“
- Additionally, when asked about autonomous vehicles, 65 percent of Gen Z expressed their mistrust if the technology would work, and 44 percent doubted if it can drive as well as people.
- According to Urban Science, “Gen Z and Young Millennials consider 3.8 brands when shopping for a new vehicle.”
- When making a decision, Gen Z prefers more traditional, practical, and trusted brands and named Ford, Chevrolet, and Honda as a top preferred brand.
- While the exact point that Gen Z picks their car is not clear, the studies suggest that more than half of them choose their after they test drive it two or more times and/or visiting 3.5 dealerships.