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The millennials have been known to impact several industries, causing consumer behavior to shift significantly and transforming the business landscape. Years ago, many experts believed that millennials would not be interested in owning vehicles. The top reason backing this forecast was the growing environmental consciousness among millennials, which was believed to be the success driver for ride-sharing services and public transportation.

With car sharing being the most popular transportation solution, the prediction was that vehicle ownership will not be as strong as in previous generations. Studies, however, have shown otherwise. Surprisingly, most research points to the idea that millennials are actually interested in owning vehicles. According to Deloitte, this generation is expected to take up 40% of all new vehicle purchases for the next 10 years.

The big question then is: What is the verdict? Will millennials likely be vehicle owners or stick to ride-sharing? If they will take up a large portion of the purchases, what can dealerships do to attract a larger market from this generation? Read on to learn more about the millennial generation and their attitude towards vehicle ownership.

Who are the Millennials?

Millennials refer to people born between 1981 to 1996 based on the Pew Research Center’s classification. However, others consider the generation’s birth years to be from 1980 to 1994. Generally, they represent about 30% of the world’s population and are known for having different lifestyle preferences compared to the previous generations.

For one, millennials are known for being more vocal, with many wanting to share their opinions on certain topics or products and services from businesses. They are comfortable with the online space, having been exposed to many social media platforms, and thus enjoy looking for content online. YouTube, in particular, is a hit for them as videos appeal the most to their age group.

Furthermore, smartphones have become integral to the millennial lifestyle as they grew up at the time when technology and mobile phones advanced rapidly. A study by Nielsen showed that their generation had the highest mobile penetration rate of more than 85% in the US. Thus, the device serves as a primary source of information for virtually everything.

Millennials have long been considered to be disrupting many norms that have been established by the past generations. From food eating habits to house-buying decisions to entertainment options, several differences distinguish this generation from their parents. Thus, the challenge for the auto industry is determining how to retain and expand the market from this generation.

Millennials Want to Own Vehicles

Contrary to the belief that millennials will be less likely to own vehicles, surveys show that many of them still own vehicles. While it is true that they have a different behavior and perception on transportation, experts say that their choices will not affect vehicle ownership as much as what was once initially thought. According to Knittel and Murphy, who used data from the US National Household Transportation Survey, these life choices are only expected to reduce vehicle ownership by less than 1%.

Other experts explain that millennials are not necessarily aversive to purchasing and owning vehicles, but several generational factors may have transportation implications. For example, this generation is more likely to live in cities and urban areas, which can make owning a vehicle less advantageous. Additionally, millennials are more likely to be single and childless in their life, which can also affect their choice of transportation.

Despite the reasons mentioned above, insurance expert Adam Johnson states that the factors do not necessarily point to a decline in vehicle ownership. It may seem like millennials are not too keen on having their own cars or vehicles, but Johnson emphasizes that this does not mean they are turning their backs on the idea completely.

Despite Ride-Sharing Hype, Vehicle Ownership Remains High

The demographic shift is threatening the success of the automotive industry, with many questions being raised on the future of vehicle-buying given the generational changes. While it has been observed that millennials seem to be buying less cars or driving less frequently, numbers say otherwise.

One survey in 2019 showed that the global ownership of cars is high among millennials, with 75% of respondents saying that they currently own or lease a car. Among this group of respondents, 83% say that they plan to own or lease another vehicle in the next five years. These results show huge potential for dealerships as the trend is expected to continue in the following years.

Several Factors Driving Millennials’ Transportation Behavior

Ultimately, the verdict is that despite the hype for ride-sharing services and a car-free lifestyle, it is clear that millennials still rely on personal vehicles to get around. Several studies and research paint a different story from what was expected and predicted by many experts. Comprehensive analyses revealed that several factors must be considered to understand the shift in their purchase behavior.

Going back to Knittel and Murphy’s study on vehicle ownership across generations, their findings show that millennials own about 0.4 less vehicles than Baby Boomers at the same stage of life. By looking at general identity alone, it appears that younger people are less interested in owning a vehicle. However, analyzing the data deeper, the researchers found that the story was much more complex than it initially seemed.

One significant finding shows that millennials generally travel less than their predecessors, but after considering the number of children, education, and marital status, they end up travelling more miles. Knittel and Murphy concluded in their study that any differences on millennials’ view on car ownership is trivial.

Creating a Pro-Millennial Customer Experience

How, then, can dealerships appeal to millennials? This big question is now at the top of many business owners’ minds, especially since the generation has different preferences than the previous generations. Creating a pro-millennial experience is perhaps the most important step to take to attract more customers from their age group. Here are some vital tips to take note of:

1. Go Digital

One of the first and possibly the most important things to do is to go digital. The millennials are known to be digital natives, having grown up in the age of the internet, so you can expect that they look for most of their information online. When it comes to vehicle-buying, they will likely conduct their research online, looking through various websites and reading customer reviews.

Due to the COVID-19 pandemic and the many restrictions that came with it, customers are also starting to lean towards an online buying process. Traditionally, the process was to do research online, but buy the vehicle physically. Today, however, changes are being made as buyers are now more wary of leaving their homes. Thus, dealers must allow buyers to buy online if they want to keep up with the trend.

2. Promote Transparency

Whether it be buying vehicles or paying for service repairs, millennials want transparency in prices. You must be more direct and honest about prices from the start as they are not afraid to voice out their opinions whenever they can. Aside from prices, the process must also be explained to them thoroughly, so they know what exactly to expect when working with you.

For dealership service centers, it is important to show customers proof of what repairs need to be done. Doing multi-point inspections allows you to create a sense of trust and prove your reputation and credibility. Overall, transparency truly is key, so your goal is to make customers feel that the process, pricing, and whole experience is fair. This way, they will have a good impression on your business and possibly recommend you to other people they know.

3. Use Social Media

Digital advertising presents tons of opportunities to reach more customers. Nowadays, the traditional word-of-mouth is no longer enough. Given that millennials are highly immersed in technology, social media platforms are the perfect way to tap into that market of customers. Surprisingly, many dealerships have yet to harness the power of social media, so doing this can give you an edge over your competitors.

Creating a Facebook page can be a good starting point to expanding your social media presence. Facebook has introduced several advertising tools that can help you target a more specific demographic by filtering factors like age, geographic area, income, and the like. These can help you create more targeted advertisements to ensure that you reach your intended audience.

4. Create Loyalty Programs

Customers are now becoming more selective about the brands they support, so coming up with more marketing practices will be essential. Creating promotions and loyalty programs can set you apart and help you appeal to millennials more as they value personalizations and discounts. However, in doing this, you must think of what is important to your customers.

Millennials are known for being more socially conscious about their decisions, so you can use this to promote your brand further. One way is to look for organizations where you can donate a portion of your sales to, so customers feel like their money is also contributing to a larger cause. Millennials make up a huge market in the overall population, so capturing their interest is essential to widening your customer base.

5. Inject Fun

If you want to make your dealership or service center memorable, you must give customers a reason to keep coming back. You can do this by injecting some fun, making your place look welcoming, greeting customers in a friendly way, and overall creating a warm atmosphere for them. Make your waiting area accommodating by having a TV turned on for entertainment, preparing some snacks and drinks to keep customers busy, and the like.

Transitioning into the Digital Landscape

Transitioning into the digital space is one of the biggest steps that dealerships and service centers must take to attract the millennial audience. You can start with a social media page, but having an accessible website will be useful to provide all the pertinent information that buyers need. You can make your site more interactive and helpful by integrating features like calculators to assist shoppers in estimating costs based on their vehicle needs.

Once you have your website designed and optimized to reach your target audience, you can proceed to use social media for marketing. With social media, you can engage with your customers, update them with important announcements, and keep them on the loop with whatever you have to offer. Social media platforms also have tools that you can use to create targeted ads to reach more users.

Moving into the digital space also means streamlining your operations with technology. Millennials want speed and convenience, so providing them with a seamless online experience is a must. Make sure to update them through texts or social media, allow them to book appointments online and remind them about these, and offer online payment options. There are tons of ways to go digital and enter the online space, so capitalizing on these opportunities is essential.

Understanding how to use various digital tools is now integral for vehicle dealerships. Technology is now a crucial aspect of any business, and now that the pandemic has restricted people from moving around too much, it has become even more important. Currently, many dealerships have yet to adjust to this change since transitioning can come with some roadblocks and challenges. However, doing it as early as possible can give you an edge and set you apart from your competitors.

Contrary to beliefs that millennials are not likely to be vehicle owners, the numbers show that this generation is certainly a promising market for dealerships. Essentially, the verdict is that they want to own vehicles and are still interested in buying them. However, the nuances in their lifestyle and preferences will require businesses to make some adjustments to grow their customer base. Failing to appeal and respond to the unique needs of this demographic will be the main reason why millennials do not shop from your dealership or visit your service center.

2020 has been challenging—and the biggest reason for this is the unexpected occurrence of the COVID-19 pandemic. As a global phenomenon, the entire world has been affected by the virus in one way or another. As such, people worldwide have had to transition to various changes in their daily lives. From taking classes online to working from home, the pandemic has led to the need for the so-called new normal.

 

Businesses are also not exempt from this, as the pandemic has forced companies to stop conducting business as usual early on in the year. Some industries, like tourism and entertainment, have been badly affected by mobility restrictions. However, as a whole, the economic recessions and downturns in different countries have caused businesses to plummet, with many still recovering from the impact.

 

Interestingly, the COVID-19 pandemic saw an increase in the number of people engaging in recreational boating. Boat sales have risen starting the summer of 2020, prompting questions about how the industry will fare as the economy recovers. Take a look at the 2020 recap of the boating industry to learn about the trends, statistics, and outlook on it.

 

Boat Sales Hit By Rocky Start, But Recovered in the Summer

 

Like many other businesses, the boating industry was hit hard by the pandemic. It became vulnerable and at risk due to the travel restrictions, stay-at-home orders, and quarantines that have kept people at home. According to the Marine CEO Sentiment Report, 81% of boat manufacturers saw an overall decline in sales in the first quarter, while 15% of manufacturers permanently shut down operations.

 

Surprisingly, however, the second quarter saw a significant turn of events, with boating sales increasing during the summer. Total boat sales increased by 59% in May compared to April, and some businesses have reported over 40% year-on-year growth for the months of May and June. People have learned to navigate the situation by looking for alternative hobbies to spend their time. Boating has turned into one of the most popular recreational activities during this time as it allows people to practice social distancing while having fun.

 

Vacationers, in particular, have turned to recreational boating due to air travel restrictions, which have put a halt on many people’s travel plans. Due to the pandemic, many have opted to leave the city and find solace in islands and lakes to get some calm out of their busy lives. Sales for new and used boats have surged significantly, with the former growing by 30% and the latter growing by 74%. Cumulative data also shows that sales for personal watercrafts, fishing boats, and jet boats have all increased this year compared to last year.

 

While boat sales may have peaked in the summer, reports show that the momentum has started to slow in September. The month registered slower shipments, which led to lower supply, but this is expected to pick up in the following months.

 

Surge in First-time Buyers

 

The rise in boating sales can be attributed to many buyers, but first-time buyers are one of the largest contributors. Boat buyers vary in characteristics, with some being first-time buyers looking for a chance to get out of the house and others being former boat owners who want to rekindle the hobby. The effect of the pandemic has come as a surprise to many as the industry boomed during this time. With boating recognized as a COVID-safe outdoor activity, many have turned to this new outlet.

 

The trend in sales from first-time buyers began in the summer and continued to grow through fall. So far, 2020 has seen about 25,000 more boat purchases than 2019, and 24,000 of these can be attributed to first-time buyers.

 

While the surge is certainly beneficial and profitable for dealers, it will also be important to help first-time buyers get acquainted with boating in general. They will need guidance in the types of boats and where they can be used, proper maintenance procedures, and other important protocols to help them get started. Educating them on safety guidelines will also be crucial to ensure they have smooth sailing experiences.

 

Boat Dealers Face Shortage in Supply

 

With the unprecedented increase in boat sales starting the second quarter of 2020, several boat dealers faced shortages. Some companies and manufacturers have expressed how unexpected the turn of events were, with many experiencing such a high demand for the first time in their many years of working in the industry. One salesman in Marina del Ray Yacht Sales noted that he used to sell 11 boats per month, as opposed to two or three before the pandemic.

 

Due to the all-time high demand, many dealerships have sold out of their products, giving rise to the problem of shortages. While the pandemic may have led to an increase in sales, it has made procurement of boats more difficult since several manufacturers were able to sustain their operations. For manufacturers that managed to continue amidst the pandemic, several disruptions have slowed down their production, leading to lower inventory levels.

 

Aside from manufacturing restrictions, lack of personnel has also proven to be a problem for dealers. Since the rise in demand was unexpected and unpredictable, several boat dealers are struggling to find enough manpower to meet the demand and provide appropriate customer service.

 

Coordinating Boat Sales During the Pandemic

 

2020 has certainly disrupted many industries, with the boating industry being no exception. While sales may have skyrocketed, dealers and sellers were still required to adjust to the changes, especially due to physical distancing restrictions. This year has particularly highlighted the growing importance of online sales and marketing. Customers prefer digital and contactless buying methods now, more than ever, due to the emphasis placed on health.

 

As a result, automated payments, online management and scheduling tools, and virtual communication platforms have all been important in managing sales amid the pandemic. As much as possible, customers want to limit contact with the purchasing process. Due to stay-at-home measures, many also begin their research on the internet.

 

As boat dealers and buyers venture into this new and uncertain situation, proper communication will be key. Whether it be matters regarding new boat sales, service repairs, or getting parts to complete repairs, dealers will have to communicate realistic expectations to customers.

 

First-time buyers, in particular, tend to have unrealistic expectations about how the process goes. Failure to set expectations can cause them to have negative perceptions on dealerships, making communication an integral part of the seller-buyer relationship.

 

Challenges Brought About by COVID-19

 

Several boating dealers have cited what they consider to be a buying frenzy earlier this year, particularly in the month of April and onwards. During this time, restrictions had started to ease slightly, and people saw boating as the perfect opportunity to recreate while social distancing. As a result, sales surged and the number of people with new boats and on the water increased significantly.

 

Evidently, the pandemic has led to an unprecedented positive outcome for the boating industry as it prompted many to learn about the activity. However, the shift in demand has also presented some challenges for boat dealerships.

 

In the short-term, the challenge will be forecasting sales to determine appropriate inventory levels, as well as staffing requirements to accommodate the demand. While the current situation has led to a rise in boat demand, the industry’s trajectory in the coming years is still not concrete. Changes are also expected to ensue in the coming months and year, now that air travel restrictions are slowly easing and people are starting to travel once again.

 

In the long-term, the challenge will mainly revolve around how the boating experience and business can be improved. This will include refining manufacturing processes to make them more efficient, developing new and innovative products, improving the customer experience, and many others. Overall, the prospects for the future have to do with how sellers and dealers can continue to promote the boating culture and convince people of the hobby.

 

Indeed, the pandemic has led to the need for a new normal, making it infeasible for businesses to run their operations as usual. Given the uncertainty on how things will unfold, there remains to be several questions. One of the most important, which remains to be unanswered, is whether the sales surge caused by the pandemic will be sustained in the coming years.

 

Innovation to Drive Boating Industry

 

The sales frenzy experienced by boat dealers this year has prompted many new market opportunities to emerge. For one, the industry is witnessing several new advancements and innovations in technological features to promote the boating experience. Nowadays, customers are becoming more reliant on automated controls to avoid having to spend too much time on learning how to operate a boat.

 

Some innovative features include lightweight engines and power systems, automatic controls, and digital throttle. With the rate at which boating sales, it is expected that these technological advances will be driving the industry in the coming years.

Boating Industry Trends to Anticipate for 2021

 

The global pandemic has caused much of the dynamics in the economy to shift. Though oating sales increased sometime in the second quarter, dealers and sellers must still be cautious about the market’s volatility. As the year 2020 nears its end, several trends are expected to drive the boating market for 2021.

 

  1. Fishing

Boats have exploded in popularity for many reasons, but fishing is undoubtedly one of the top uses for these vehicles. Thus, fishing boat sales are expected to regain momentum in 2021 after they dropped in 2019. Related fishing accessories will also accompany the boats and are projected to have favorable growth for the coming year.

 

  1. Rentals

Aside from boat sales, boat rentals have also risen in popularity during the pandemic. Many people have found solace in spending a day or two in the water after months of staying at home, thus leading to increased boat rentals. Organizations like the Center of Disease and Control (CDC) have provided safety guidelines to practice social distancing and protect one’s health.

 

With that said, the positive growth in the boat rental industry is expected to continue through 2026. Medium-sized boats ranging from 28 to 45 feet in length tend to be the most popular and in-demand category for sales, boats larger than this have observably lower demand for rentals.

 

  1. Affordability

The pandemic has caused consumer perception and priorities to shift significantly, so customers are now more discerning about their expenses. Fortunately, boats have started to become more affordable due to more advanced technologies that can boost efficiency in production and manufacturing. However, with that said, affordability may be relative to the consumer, so it still depends on the company’s target market and product offers.

 

  1. Family Activities

Boating demand increased rapidly for various reasons, and family activities serve as one of the top growth drivers for revenues and sales. As a result, family-friendly and family-oriented boats are expected to remain popular. This projection will also prove to be valuable for manufacturers as boats like the pontoon can be customized and innovated in various ways.

 

 

The boating industry is one of the industries that saw an unexpected rise in sales due to the pandemic. Such a change was coupled with challenges like the lack of workers due to lay-offs, shortages due to manufacturers closing operations, and many others. However, on the flipside, it has also led to many opportunities to get more buyers to incorporate boating into their lifestyle.