Dealer Insights: Car Sales Trends & Best Practices

car dealer stands with customers and cars

Car Sales Statistics

While 2020 and 2021 witnessed a sharp decline in car sales resulting from the pandemic, the auto industry appears to be on a steady rise, with new car sales expected to rise to 15.47 million vehicles from an estimated 15.07 million in 2021.

According to Kelley Blue Book, trucks and SUVs picked up market shares with a year-over-year increase in average transaction prices at 1.5%, and the top-selling SUVs of 2021 included Toyota RAV4, Honda CR-V, Nissan Rogue, and Toyota Highlander.

Car Buying Habits

A recent study found that most new and used car shoppers begin the research phase of the car buying process online. With quality and affordability being a top priority for many consumers, along with new car production delays resulting from chip shortages, used cars continue to be in demand for consumers. Let's take a closer look at car buying trends and habits for each generation.

Car Buyer Trends by Generation

Baby Boomer Car Buyers (born 1946- 1964)

A recent report found that baby boomer shopping habits differ from other generations. Less than a third of car buyers in this generation find shopping relaxing and are also considered to be a more price-conscious and fiscally conservative generation.

Additionally, boomers are very confident in their purchases, as only 12 percent rely on referrals from family and friends to help them make a purchase decision.

Gen X Car Buyers (born 1965-1980}

Unlike Millennials and Gen Z car buyers, who conduct research on their phones while in the store, a recent study found that Gen X car buyers are more likely to conduct online research at home. Although they are social media users, the study found Gen Xers are more influenced by email marketing campaigns - especially ones that offer discounts. And when it comes to brand loyalty, quality customer service is most important.

Millenial Car Buyers (born 1981-1996}

According to CDK Global's Millennial Car Shoppers report, millennials spend more than 17.6 hours car shopping online before visiting the dealership and nearly 75 percent of millennials end up purchasing the vehicle they have in mind when visiting the dealership.

The report also found that 62 percent of millennials use the dealership website as a source of information during the research process. This means that by the time millennials visit your dealership, they are most likely ready to purchase a vehicle.

According to another CDK Global study, "Most millennials said they wouldn't wait more than five seconds for a page to load on a mobile device. In addition to slow load times, lack of mobile optimization, interactive features, and quality photos were the top complaints about mobile shopping. Essentially, millennial shoppers expect to get the same quality shopping experience no matter what device they are using."

A Facebook study also found that 48 percent of mobile-first car buyers are millennials, suggesting that online car dealership platforms should be optimized for mobile users.

Gen Z Car Buyers (born 1997-2012)

Generation Z - also referred to as Digital Natives or the iGeneration - is the first generation to grow up fully immersed in digital technology (i.e., the Internet, social media, smartphones, etc.). Growing up with access to a wealth of information right at their fingertips has made Gen Z the most technologically advanced generation of the present day.

In fact, according to Automotive News, Gen Z is more educated about the market than young car buyers 10 to 15 years ago. Even while Gen Z car buyers are at your dealership looking at a vehicle they're interested in, they are on their phones, researching other vehicles (and other dealerships).

Hootsuite data found that Gen Z car buyers prefer to shop on mobile devices and use a smartphone to visit an online retail store (80%), engage on social media (95%) and shop for a product online ( 61 %) . This information should reinforce to car dealers the importance of meeting consumers where they are, according to their browsing and shopping preferences. In the case of Gen Z, it's mobile technology.

Below are some key characteristics that car dealers should note when working with Gen Z car buyers:

  1. Hungry for information.
    The more helpful content you produce on your website and/or blog that guides Gen Z car buyers along their car-buying journey, the more likely you are to attract them to your dealership to make a car purchase.

  2. More financially & environmentally conscious.
    Automotive News says Gen Z car buyers are looking for more practical, sustainable means of transportation, like used vehicles with good gas mileage as well as hybrid or electric vehicles.

  3. Not tied to a particular brand.
    According to Spectrum Reach, Gen Z car buyers care more about having a positive customer experience than brand loyalty. Be a resource in the Gen Z consumer's journey and think about how you can make their car-buying experience an exceptional one.

Car Dealer Best Practices

Building customer retention at your car dealership is an effective way to increase trust, credibility, and profitability for your business. To retain customers in your dealership, it's important to understand consumer behaviors in your market and what appeals to your customers.

Dealer software company Modera shared some insightful stats to help car dealerships identify and manage customers more effectively when developing customer retention strategies.

  • Car buyers become more loyal to brands they trust as they age.
    According to Modero, the customer retention rate for ages 18-24 is 58.3 percent while ages 70+ have a retention rate of 70.4 percent.

  • 62% of consumers stop doing business with a company due to poor customer service.
    This is why it's so important for your dealership to create a positive car buying experience for your customers.

  • Customers who service their vehicle regularly at your dealership are 86 times more likely to purchase their next vehicle from you.
    Along with being a great source of revenue for your car dealership, your service department is also a great way to retain customers. Offering quality service as well as amenities and perks while customers are waiting for their vehicle to be serviced can make all the difference.

Car Dealer Retention Strategies

  1. Encourage regular maintenance appointments.
    Since the service department is a way to retain customers at your car dealership, encouraging customers to get their vehicles serviced through your dealership via email communications, service specials, etc. may be an effective strategy for helping you achieve this goal.

  2. Build a reputation for selling reliable vehicles.
    Whether you sell new and/or used vehicles, building and maintaining a reputation for selling quality, reliable cars may help you earn your customers' repeat business and attract new customers.

  3. Offer quality customer service.
    Making every customer feel important can go a long way towards earning their repeat-and-referral business. Pay attention to the smaller amenities such as complimentary coffee, water, and tea or a sitting and play area for children. If your goal is to gain lifelong business, you want to make sure your customers view your dealership as more than just a place to buy a car.

  4. Stay in constant contact with your customers.
    Customer retention is based on loyalty, loyalty is based on trust, and trust is based on communication. Communicating with your customers through more than just marketing messages is an effective way to build trust. Sending personalized messages to your customers for a birthday, holiday or special event shows that you care about them not only as a customer but as a person - which can go a long way.

  5. Provide written credit approval to credit-challenged car buyers.
    Having the ability to approve first time car buyers or customers with bad credit for auto financing is an effective way for your dealership to build trust. Dealers enrolled in the Credit Acceptance auto finance program can offer written approval to car buyers with bad credit or no credit through our proprietary Credit Approval Processing System, CAPS®.

For more car sales and auto financing insights, visit our Car Dealer Resource Center.

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