As the automotive industry faces a delicate balance of ensuring short-term profitability while remaining focused on long-term growth through electric vehicles, autonomous technology, and connected services, a new generation has come of age.
Generation Z may appear superficially similar to their generational predecessor, the Millennials, but a closer look reveals some important distinctions that auto marketers need to account for when building their communication strategy.
What is Gen Z?
Gen Z, sometimes called the “Zoomers,” are people born between 1997-2010. Demographically speaking, they are the most diverse cohort of any generation in U.S. history, with around 52 percent non-Hispanic White, 25 percent Hispanic, 14 percent Black, six percent Asian, and five percent mixed race.
Moreover, 22% of Gen Z has at least one immigrant parent, compared with Millennials with just 14 percent, and according to Census Bureau projections, this generation is projected to become majority nonwhite by 2026. This historical diversity has important implications for marketing strategy, particularly as Gen Z brings with them certain cultural norms that manifest themselves through their purchase decisions.
How Gen Z is Approaching vehicle Ownership
Like Millennials a decade ago, Gen Z has been labeled as somewhat apathetic to personal vehicle ownership. Looking back at articles published in 2014 with titles such as “The many reasons Millennials are shunning cars,” we now know that Millennial adoption of personal vehicles (and homes, for that matter) reflects that of similar generations, albeit a bit later in their lives as they gained wealth and paid down historically high levels of student loan debt.
A 2019 study from MIT concluded that “while Millennial vehicle ownership and use may be lower early on in life, these differences are only temporary, and lifetime vehicle use is likely to be greater.”
Could the same thing be happening with Gen Z? Media outlets are sounding the same alarm as a decade ago, making declarations such as “Zoomers are shunning cars and driver’s licenses,” but why?
Financial Motivations
We see a similar financially-motivated picture playing out with Gen Z as it did with Millennials, with high-interest rates and inflation leading them to pause on major purchases, according to Bank of America.
Indeed, two of Gen Z’s most important considerations for a new car purchase are price and fuel efficiency, according to Cars.com.
So while much of the focus on why Gen Z has been slow to obtain a driver’s license or a personal vehicle has been centered around increasing levels of urbanization, alternative modes of transportation, and a focus on sustainability, the biggest reason is likely the same one that delayed Millennials—car ownership is expensive.
How should automotive marketing plans evolve to account for the growth of Gen Z moving forward? Here are four things to consider.
Marketing Plan
Today’s multicultural marketing segmentation should be absorbed into what we now call the “general market” as Gen Z matures over the next decade. Many automotive marketing plans today allocate a certain percentage of their media budget to reach a general market audience, and a certain percentage to reach multicultural groups.
Demographically speaking, multicultural and general market are quickly becoming one, so rather than segmenting budget by demographics, developing multiculturally representative creative messaging and serving it dynamically across multiple digital touchpoints allows for a more flexible approach to budget allocation for A/B testing of ad formats, channels, CTA’s, and messaging.
Focus on Entry Point
From a vehicle perspective, focusing on new sedans and crossovers as an entry point to the brand is a great strategy considering Gen Z’s financial outlook.
According to vehicle registration data from S&P Global Mobility, Gen Z was the only demographic group that included sedans in their top four vehicle rankings, with the Toyota Camry the most popular, followed by the Toyota Corolla and Honda Civic.
With MSRP’s $26k or lower for all three, its no surprise that these vehicles would resonate with Gen Z, and it doesn’t hurt that both brands rank highly for reliability either.
Where to Advertise
Linear TV viewership amongst Gen Z is declining steadily and will fall below 40 million viewers during 2024, according to an eMarketer forecast. But their CTV viewership is on the rise, approaching 55 million viewers in 2024, meaning auto marketers can reach these young consumers on a massive scale on the largest digital screen in the household.
According to research from mountain.com, 54% of Gen Z don’t mind watching ads and enjoy personalized ad experiences, where CTV has a distinct advantage over linear.
Localizing CTV ads using QR codes that scan directly to real-time dealer inventory on a mobile device reduces friction in the buying process, while activating data segments such as demographics, lifestyle, and content preferences, or in-market auto-shopping behavioral data ensures a relevant message tailored to the viewer’s current interests, which is something linear can’t offer.
Patience with Gen Zs
Given the fact that many Gen Z shoppers are buying a new car for the first time, 80% of them said the most important element was the ability to take their time and understand their options before committing, according to a survey from CDK.
They are more interested in working with a knowledgeable representative than any other group, in a nod to the role a dealer can play in helping educate these young shoppers. In terms of marketing messaging, including expert content such as new vehicle reviews and test drive scores can help them gain a baseline understanding of the features they should be asking about while shopping, in addition to gaining an unbiased resource to consult as another point of validation as they make their decision.
Gen Z is as unique as any generation that has preceded it, and auto marketers need to step up their game to reach and engage with them. With the right approach, however, the future of the auto industry is in good hands with this group of inclusive, influential, and idealistic individuals.
