3 Trends Guiding the Evolving Auto Industry
When we think of car ownership in America, we pull up images of your first car on your 16th birthday, the family van for after-school activities, and road trips. Yet, as we heard repeatedly while working on a branding project focused in the automotive industry:
“Owning a car is no longer a rite of passage.”
The historically low car sales that were a result of the great recession of 2008 and the decreasing numbers of 16-year-olds getting their driver’s licenses today (down 47% from the 1980s) have influenced this shift, and we have identified a few major trends, noted below, that contribute to this new 21st-century reality. It is interesting to observe how automakers and dealers are addressing the challenges and adapting to the evolving market.
Women and Millennials are This Decade’s Primary Car Buyers
The stereotypical average car buyer is a middle-aged man, but in recent decades, the market has shifted dramatically. Today, women are buying 60% of all cars sold in the US and have direct influence in 85% of all car-buying decisions. Millennials purchased 11% more cars between 2010 and 2015, and this trend is rapidly rising. Women see cars as lifestyle tools, opting for vehicles with practical impact on their day-to-day activities. Millennials also see cars as tools for life, buying only when necessary and often after major lifestyle shifts (marriage, having kids). Both demographics hate the hard sell (think pushy car salesman), so the majority do their car buying online or on their phones.
Leaning into these new demographics, auto manufacturers are changing the layouts of their showrooms, opting for a more relaxed, lounge-like feel. Instead of meeting with salespeople, potential buyers now meet with customer relationship managers who provide guidance and information, but don’t engage with a hard sell.
- Demographic Shifts: Shaping the Future of Car Ownership – Link
- The Decline of the Driver’s License – Link
- Women driving auto industry, from design to dealerships – Link
“-Sharing” is Creating New Market Opportunities
The success of ride-sharing apps, like Uber and Lyft, has motivated big name companies to expand their offerings. Ford has acquired the van-sharing company Chariot, GM bought a 10% stake in Lyft for $500 million, and Daimler AG (Mercedes) put $500 million into a Middle East version of Uber.
Dealers are also being pressed to imagine a future in which people no longer own their vehicles through traditional leasing or buying options. Subscription services are gaining popularity, a model in which a driver can take an extended test drive and swap out to try different cars. Independent companies like Mobiliti are leading the pack in this marketplace, with Ford, Cadillac, Porsche, and others hot on their tail lights with launches of their own subscription services.
More ripple effects will come with the inevitable advent of self-driving cars.
- Why car companies are trying to imitate Uber and Lyft – Link
- Car-Subscription Service Mobiliti Is Sort of Like a Press-Car Fleet for Civilians – Link
- The Effect of Ride-Sharing on the Auto Industry – Link
Technology is Influencing the Sales Process of the Future
With over 80% of new car buyers using the internet to conduct research prior to stepping into a dealership, and 75% saying they would rather go through the whole buying process online, car manufactures are embracing new technology and ideas in the sales process.
Understanding that the modern car buyer prefers experiences to things, car manufacturers are utilizing technology to create memorable moments that will fuel customer loyalty. Potential customers can now take virtual test drives using VR headsets, fully customize their vehicles with 3D models, and visit “live stores” via their laptops.
- Porsche: VR-Powered Dealerships Will ‘Revolutionize’ Car Buying – Link
- Dealers Move Beyond Doughnuts – Link
- Audi Drives Virtual Reality Showroom with HTC Vive – Link
With driver demographics and technology and lifestyles changing so rapidly, we can only imagine the options the auto industry will present to us in the future. Perhaps owning a car will cease to be a rite of passage for Americans, perhaps ride-sharing or subscription services will become the new stereotypical norm. Whatever happens, we’re eager to see what creative minds come up with to anticipate and advance the future of the auto industry.