New-vehicle sales impact of millennial generation on the rise

Millennials

Selling to millennials taking a front seat.

 

The purchasing power of Generation Y, known as millennials, is hitting new-vehicle retail sales, surpassing Gen Xers for the first time.

And that has significant implications for new-vehicle dealerships’ sales efforts.

“If you [dealerships] haven’t started actively considering how to attract more younger buyers, now might be the time to do so,” suggested Auto Remarketing at autoremarketing.com.

An analysis by J.D. Power shows that millennials accounted for 26 percent of new-vehicle retail sales compared to 24 percent of new vehicles year to date. Purchases by the baby-boom generation still dominate the market, accounting for 40 percent of new-vehicle sales.

Gen Y sales volume is on pace to grow 17 percent for the full year 2014 compared to last year, almost triple the increase of 6 percent in Gen X sales volumes during this period.

Millennials were born in the period 1977-94, Gen Xers 1965-76 and boomers 1946-64.

“As Gen Y consumers enter new life stages, earn higher incomes and grow their families, their ability and desire to acquire new vehicles is increasing,” said Thomas King, vice president of the Power Information Network (PIN), which collected the latest sales data from J.D. Power.

“As new-vehicle demand among Gen Y consumers increases, it will be important for automakers to respond to the needs of these consumers, not only in terms of the vehicle design, but also the marketing, sales and service experience,” King said.

In what kind of vehicles are millennials most interested? Inexpensive compact cars with low cost of ownership and up-to-date technology, Cars.com reported recently. About 70 percent of millennials ages 21-24 and 55 percent ages 21-35 are looking for new vehicles that cost less than $20,000, Cars.com said.

The PIN data also shows that millennial shoppers tend to favor smaller vehicles, with compact and small-vehicle segments accounting for nearly half of all Gen Y purchases.

Gen X shoppers lean toward larger vehicles such as midsize cars and compact SUVs.

For more on the shopping patterns of Generation Y, see “Millennials shopping for car value – and personal expression” on Santander Consumer USA’s Greenlight blog for dealers.

 

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