How dealers can win over Gen Z buyers

This article initiates a series analyzing this year’s Urban Science/Harris Poll survey. The survey delves into consumer perceptions of the relevance of the traditional automobile dealership model.

This year’s Urban Science/Harris Poll offers welcome news for dealers looking to boost profits, gain customers and build loyalty. Data shows Gen Z consumers highly value dealerships, even more than just a year ago.

That’s significant news for dealers. Not only are Gen Z consumers – those born after 1995 – more interested in car ownership than previous generations, but they also have the credit scores and financial means to buy or lease.

And, of course, Gen Z begins a new generation of retail shoppers.

This interest in vehicles becomes particularly vital in the current market, marked by an abundance of inventory, high interest rates and a prolonged buyers’ market following the chip crisis and pandemic.

Other factors, including cautious lenders, high gas prices and fluctuating manufacturer incentives, have stalled sales and driven down dealers’ profits. Consequently, some dealers have implemented cost-saving measures, including hiring freezes, that can result in harried employees who don’t meet customers’ needs for information or timely service.

However, dealers can change this trajectory and zero in on the Gen Z consumer.

How dealers can satisfy Gen Z consumers

The data from this survey shows what Gen Z consumers want when they shop for vehicles. That information can steer dealers toward bringing more Gen Z consumers into their dealerships and gaining the rewards with increased market share.

As many have said, the Amazon shopping experience has set a high bar for all retailers. But as auto dealers educate staff, adopt artificial intelligence and offer newer products, they can build hybrid sales models that appeal to all customers, especially Gen Z consumers.

Dealers can combat that migration by ensuring they meet Gen Z’s shopping expectations, whether they want to shop in-person or entirely online. Strategies to meet Gen Z’s wishes include:

1. Offer shopping flexibility, including through an omnichannel shopping experience

Gen Z is more willing to consider full digital retailing than consumers of other generations. Almost half (43%) of Gen Z respondents are open to purchasing vehicles fully online. Millennial consumers are even more enthusiastic, with 47% of them considering full online vehicle purchases.

Most (68%) Gen Z consumers would consider purchasing from a traditional dealership’s website. And even more (80%) millennials would do the same. That millennial figure is 9% higher YoY.

Of course, that data doesn’t mean dealers should abandon showrooms. The majority (87%) of Gen Z are open to considering traditional in-person shopping at dealerships. It implies that dealer flexibility is critical to growth.

2. Maintain a consultative environment

Gen Z respondents’ desire for traditional dealership experiences goes hand-in-hand with their desire to work in a consultative environment.

Almost half (43%) of Gen Z respondents say such dialogues can increase their likelihood of visiting dealerships. That is 14 percentage points higher than auto buyers of other generations.

3. Lean in on EVs

More than half (56%) of Gen Z respondents say they will be ready to only accept EVs by 2030, which is eight percentage points higher than the average of consumers of other generations.

Not only are they more willing to consider EVs, data shows they are willing to pay a 47% premium above comparable ICE vehicle prices – and that’s 19 percentage points higher than the average of auto buyers.

Dealers can make moves to ensure they are prepared to consult with prospective EV buyers by training staff, offering customer education post-sale and working to advance charging station availability.

It’s important to note that Gen Z shoppers consider more brands (2.7) and visit more dealerships than shoppers of other generations.

While some might consider that a negative, dealers can make the interest in shopping various dealerships work for them by using smart marketing strategies to entice Gen Z customers to their showrooms. One successful strategy is to offer – and market – incentives for test drives. Data shows incentives would entice 87% of Gen Z shoppers to test drive a vehicle. Almost that same number (83%) say incentives would make them test drive EVs.

1. Source: Urban Science Online Consumer and Dealer Studies, February 2024. These surveys were conducted by The Harris Poll on behalf of Urban Science among 3,005 U.S. adults aged 18+ and 250 U.S. automotive dealers.