Most credit unions and banks are trying to get younger (see all the Generation Y obsessed marketing efforts). Those marketing promotions tend to lead with auto loans as the top product. However, leading with the auto loan is not a slam dunk when it comes to reaching the Millenials.
A recent study indicates there is some good news and bad news for financial institutions regarding Generation Y and auto loans. According to the Deloitte study (Dude, Here’s My Car: Gen Y Shows Interest in Vehicle Ownership), 61% of Gen Y consumers expect to buy or lease a car within the next three years (with almost 23% expect to purchase or lease in the next 12 months).
So that’s the good. There are also some red flag concerns. The report noted that 40% of Gen. Y consumers say the salesperson at the dealership has a major or significant impact on vehicle purchase (compared to 27% of other generations). Also, 53% of Gen Y consumers feel the auto manufacturer websites have a major or significant impact on vehicle purchase (compared to 35% of other demographics).
Perhaps the most important finding (from an opportunity standpoint) was that among Gen Y consumers who do not currently own or lease a vehicle, cost seems to be the main barrier (with almost 80% saying it is because they cannot afford it).
So what do the study’s findings mean for credit unions and banks? Plenty. Consider these points:
- Make the auto loan section of your website rock for Gen. Y—We know Gen. Y is web savvy and focused. But don’t compare your website to other financial institutions. When it comes to auto and auto loans, Gen. Y is going to auto dealer sites. How does your electronic user experience stack up to them?
- Leverage your good finance deals with Gen. Y’s concerns about affordability—The number of these kids (80%) who can’t afford a loan is staggering (you’d think the fact that they are moving back in with mom & dad would give them some extra cash!). The fact is your credit union or bank has lower rates than the dealers. But don't talk about rates: translate the lower rate into actual dollars saved per month.
- Educate Gen. Y on the pitfalls of car dealerships—Are these Gen. Y kids crazy or just naïve? They are actually going to rely on the car dealer salesperson? In a polite way, your financial institution should demonstrate how we are the good guys and car dealers are well, car dealers.
- Promote car loans now—Don’t wait. Gen Y certainly isn’t (unless they’re broke). Your bank or credit union should start dripping regular auto loan marketing messages to young consumers as soon as possible. And make sure those messages are not direct mail (use texts, messages inside home banking, Gen. Y community events, etc.).
Smart financial marketers already know the importance of marketing to Gen. Y. However, the Deloitte study offers additional insights we should leverage as we build our Gen. Y campaigns.