Jessica DelGreco didn’t think she was doing anything special when she bought a used Toyota Prius in 2021.
The 23 year old decided it was time to trade in her gas-fueled Jetta, and she w an ted to go hybrid this time to save on fuel.
The price, at just under $17,000 for a 2-year-old model, was right for her budget, she’d save a lot of money on gas, and – bonus points – her purchase would be easier on the environment.
“It is a lot more sustainable,” she says, referring to the hybrid drivetrain, in addition to the fact that a used car taps fewer resources than a new one.
DelGreco, who fairly straddles generations Y and Z, is apparently not alone within her demographic, as a recent survey by Ally Financial found that 71% of consumers ages 18 to 40 prefer buying used cars over new ones. And of those respondents, 63% said their main motivation is sustainability.
Experts who are paying attention to those statistics see opportunity for car dealers to market both their used car inventories and their service contracts to young shoppers who shop used.
In fact, the Ally survey of 2,000 adults also found that 81% of younger consumers say they’re more inclined to buy a vehicle service contract to control expenses in the volatile times they found themselves in just as many entered the car-buying market for the first time.
“Auto dealers should continue to present products the way they have but add in the benefit of longevity and sustainability,” says Gabriel Garroni, Ally Insurance senior vice president of sales. “Pay attention to the customer, educate the customer — explain why there are differences in coverages and what that means to their ownership experiences.”
That’s even more important because of the market they find themselves in today, with much higher sticker prices and low inventories.
Rich Newsome is the dealer who sold DelGreco her Prius, and though in her case, marketing didn’t make a difference, he sees the need to speak to younger buyers in their preferred ways.
“It’s a very authentic generation,” he says. “They’re not into the push-pull-drag type of messaging. They’re very much into personalization, whether it’s accessories, different verticals, whether online or all in-store or a combination of both. They’re really into the authenticity of the vehicle — show them the history, the service records. And they do seem conscious of the environmental factor.”
That means short video “stories” on YouTube, TikTok and Instagram instead of the print ads and TV commercials during the local news show targeted to earlier generations, though he still employs the former to reach older buyers.
DelGreco came to the Dublin, Ohio, Honda store that Newsome manages because she used to babysit his children and had a good word on the dealership from a former boss. True to her generation, she’d already done her research, knew the make and model she wanted, even the maximum mileage, and he found a Prius for her that fit those parameters.
“We’ve got a lot of omnichannel approaches. We track that through our metrics and meet quarterly to review and make adjustments as needed,” Newsome said of his Germain Honda Dublin. “Really, what we’re trying to get is brand awareness and brand engagement. If you can make your brand viable, your footprint in the community, trying to connect on a personal level — anybody can post a car ad, not that you don’t.”
Whatever the young buyer’s shopping list includes, Newsome says salespeople must approach them with complete genuineness.
“Between marketing and the transaction, it needs to be authentic and transparent, as much information and open and honest dialogue as you can.”
KNOW YOUR CUSTOMER
However a dealership draws younger customers, once they show up on the sales floor, they should try to understand their needs and communicate how they can meet them, Garroni says. “It begins with knowing your customer. Where are they with their budget? How long do they intend to keep it, and how will they use it?”
Garroni, who at 44, says he’s considered a“cusper” who’s just outside the millennial cohort, also urges dealers to poll their own employees who are in the younger generations to find out what’s important to them personally when it comes to car buying, then implement what they learn. “Just be inquisitive.”
“For the first time in a long time, I’m seeing some really interesting changes in our industry,” he says. “It’s an exciting time that will allow us to experiment with products to engage customers. It’s an exciting time to improve customer engagement just through customer awareness.”
Newsome, for one, says his dealership believes the younger generations will trade their cars less frequently than Generation X and baby boomers, at least in their earliest car-owning years, another reason they may be more apt to buy service contracts.
DelGreco, perfectly fitting her demographic’s car-buying leanings, drove off the Germain Honda lot at about 25,000 in mileage, several thousand dollars less than her price maximum and saving $11,000 off the new Prius sticker price at the time, and with a five-year service contract for an extra $60 a month on her financing – an add she says she likely wouldn’t have made for a new car.
“When gas prices skyrocketed, I figured my car was paying for itself. I’m spending about $35 a month on gas — I moved to Houston in April and have had to fill up just four times. Also, buying used is more sustainable.”
Hannah Mitchell is executive editor for F&I and Showroom magazine.