Market Insight: Gen Y buying habits

THE digital age is having a major impact on the way Generation Y consumers research their car purchases, but a new survey shows they have not lost faith in a time-worn source of information – family and friends.

However, this does not mean new-car dealers will have less opportunity to reach Gen Y buyers.

In an interesting development, the ‘Australian insights’ section of the latest Deloitte Global Automotive Consumer Study shows that Generation Y buyers do significantly more research overall when buying a new vehicle than other generations.

For each of the six different sources of information, the Gen Y consumers – typically born between the early 1980s and the late 1990s – did more research overall than other people.

What was unexpected was that the most-used source of information for other generations – independent websites – came in second for Generation Y consumers.

A whopping 76 per cent of them consult family and friends when researching a new car, according to the Deloitte survey.

This is not quite double the 43 per cent of buyers from other generations who turn to family and friends for advice.

But it was a similar story in all the other sources of information: Generation Y buyers do more research.

Deloitte’s lead partner for Motor Industry Services in Australia, Grant Cameron, said he thought this extra commitment to research may be a result of Generation Y consumers growing up in the digital age.

“My sense of it is that this follows from trusting and growing up with social media,” he said.

“If that’s an avenue to learn and trust, friends and family are a part of that.”

Mr Cameron said these buyers, now aged between 20 and 37, are a major target for dealers as they will soon supersede their parents, the baby boomers, as the largest car-buying demographic.

“I go to NADA (the national convention of the American National Automobile Dealers Association) every year and probably 40 per cent of the workshops are on Gen Y and how to sell to them,” he said.

“I think that tells us something: they just buy differently. They look for cars differently, and they buy differently.”

The reliance on web-based sources of information by Generation Y is pronounced.

Independent websites like GoAuto are consulted by 55 per cent of Generation Y buyers (43 per cent in other generations), while these buyers also rely heavily on news articles and media reviews, as well as manufacturers’ websites.

However, the most pronounced difference is the reliance Generation Y buyers place on social media.

Twenty-two per cent of them turned to social media for advice, more than five times the rate of other generations (four per cent).

This familiarity with, and trust in, digital media could encourage more of Gen Y to become interested in cars, if one of Deloitte’s megatrends is proved correct in coming years.

Apart from analysing Australia’s Generation Y consumers and their habits, the Global Automotive Consumer Study also identified six megatrends that are going to buffet and influence the automotive world in coming years.

One of these is the development of web-connected cars and new software that will bring a broad range of services and applications into the cabin.

“Innovations in vehicle to vehicle (V2V) and vehicle to infrastructure (V2I) connectivity, mobile phones, applications and smartcard technology are disrupting the automotive industry,” Deloitte says in its survey.

“Consumers will expect experiences that go beyond the sales and service transaction and leverage technology to integrate with their connected lifestyles, both inside and outside the vehicle.”

Deloitte believes all these developments will combine to blur the formerly clear lines between ownership and non-ownership and between goods and services.