Automotive: Want to Win Over Gen Z? Think Used Cars, Service Deals and Smaller SUVs
- InsightTrendsWorld
- Jun 25
- 14 min read
Why it is the topic trending: The Shifting Automotive Market: Why Dealers Need New Strategies to Attract Younger Buyers
Declining New Car Registrations Among Young Adults: The article highlights a significant drop in new-car registrations among 18- to 34-year-olds, falling below 10%, indicating a major shift in the automotive market and a challenge for dealerships.
Need for Dealers to Adapt Their Focus: With younger buyers disappearing from the new-car market, the article emphasizes the necessity for dealerships to change their strategies to engage this demographic through other means beyond new vehicle sales.
Importance of Long-Term Relationship Building: The focus should shift from simply selling new cars to building lasting relationships with younger buyers, ensuring they remain connected to the dealership for future business opportunities.
Untapped Potential of Younger Buyers: Despite the drop in new car purchases, the 18-34 age group still represents a significant market with long-term value due to their extended future as consumers.
Overview: Gen Z and Millennials Steering Clear of New Cars: Dealers Urged to Pivot to Used Inventory, Service, and Targeted Marketing
The article discusses the declining share of new-car registrations among younger adults (18-34) and advises car dealers on how to adapt their strategies to continue engaging this valuable demographic. Instead of solely focusing on new-car sales, dealers are encouraged to prioritize used inventory that aligns with younger buyers' affordability and preferences, offer service deals to attract those who own vehicles (even if purchased elsewhere), and tailor their marketing strategies to reach in-market shoppers effectively. The article emphasizes that while affordability is a major factor in younger buyers' reluctance to purchase new vehicles, focusing on building long-term relationships through these alternative approaches can keep them connected to the dealership for future sales and service needs.
Detailed findings: Decoding the Declining Demand: Key Data and Insights on Younger Car Buyers
New-car registrations among 18- to 34-year-olds have fallen below 10%, reports S&P Global Mobility.
The share of new-vehicle registrations by adults aged 18 to 34 fell from 12% in Q1 2021 to 9.9% in the first two quarters of 2025.
During the same period, the proportion of those aged 55 and over increased from 44.8% of new registrations to 48.6%.
The primary reason for the drop in younger buyer registrations is affordability, including available inventory within an appropriate price range.
The 18-34 cohort still accounted for nearly 1.1 million new-vehicle registrations from April 2024 to March 2025.
Compact utility vehicles accounted for 20.8% of all new retail registrations for those 18-34 in Q1 2025.
Compact cars ranked second with 13.1% of new retail registrations for the 18-34 demographic in Q1 2025.
Younger shoppers show a preference for fully electric vehicles, diverging from broader hybrid trends.
In the first four months of 2025, the 18-34 age group accounted for 15.7% of used-car registrations, up from 15.1% for all of 2023.
Dealers should target younger buyers who bought their brand from another dealership with service specials.
Dealers should prioritize marketing to in-market shoppers rather than focusing on specific age or gender demographics.
Investing in addressable media, which streams different ads to different customers, is a good way to reach younger buyers.
Key success factors of product (trend): Driving Engagement: Strategies for Dealers to Win Over Younger Buyers
Focus on Used Inventory: Offer a selection of used vehicles that are affordable and appeal to the preferences of younger buyers.
Promote Service Opportunities: Attract younger vehicle owners with service specials, even if they purchased their car elsewhere, to build a relationship.
Offer Smaller SUVs and Compact Cars: Stock new vehicles that align with the preferences of this demographic, with a focus on smaller, more affordable models like compact utility vehicles and cars.
Consider Electric Vehicle Options: Recognize the preference of younger shoppers for fully electric vehicles and ensure relevant inventory.
Implement Targeted Marketing: Utilize addressable media to reach in-market shoppers effectively, rather than relying on broad age and gender demographics.
Key Takeaway: Adapt or Decline: Car Dealers Must Shift Focus to Used Cars, Service, and Targeted Marketing to Engage Gen Z and Millennials
The key takeaway for car dealers is that to effectively engage Gen Z and Millennial buyers, they need to adapt their strategies beyond solely focusing on new car sales. This involves prioritizing used inventory that fits younger buyers' budgets and preferences, leveraging service opportunities to build relationships, stocking smaller and potentially electric vehicles in their new car inventory, and employing targeted marketing strategies using addressable media to reach in-market shoppers.
Main trend: The Generational Shift in Car Buying: Dealers Pivot Strategies as Gen Z and Millennials Favor Used and Smaller Vehicles
The main trend in the automotive market is a significant generational shift in car buying behavior, where Gen Z and Millennials are increasingly less likely to purchase new vehicles and are instead favoring used cars and smaller vehicle types, necessitating a strategic pivot for car dealerships to focus on these areas and adapt their marketing efforts accordingly.
Description of the trend (please name it): The Affordability Angle: Describing Younger Generations' Approach to Car Ownership
The Affordability Angle: This trend describes the shift in car buying behavior among younger generations (Gen Z and Millennials) who are increasingly priced out of the new car market and are prioritizing affordability by opting for used vehicles and smaller, more budget-friendly new car options like compact utility vehicles and cars. This trend also highlights their openness to transportation alternatives and the need for dealerships to engage them through service and targeted marketing.
Description of consumers article is referring to: Who's in the Driver's Seat? Describing Gen Z and Millennial Car Buyers
Likely individuals aged 18 to 34 in 2025: This is the specific age range focused on in the article.
Price-sensitive consumers: Affordability is cited as the "big one" contributing to their reluctance to buy new cars.
Open to used vehicles: They represent a growing share of used-vehicle customers.
Preference for smaller vehicles: They favor compact utility vehicles and compact cars when considering new purchases.
Interest in electric vehicles: Younger shoppers show a preference for fully electric vehicles over hybrids.
Potentially utilizing alternative transportation: They have other options besides car ownership, including Uber, Lyft, and rideshares.
In-market shoppers: Dealers should prioritize marketing to those actively looking to buy a car.
Who are them: Adults aged 18 to 34 in 2025, primarily Gen Z (born roughly 1997-2012) and older Millennials (born roughly 1991-1996).
What kind of products they like: They prefer affordable transportation options, including used vehicles and smaller new cars like compact utility vehicles and compact cars. They also show an interest in fully electric vehicles.
What is their age?: Between 18 and 34 years old in 2025.
What is their gender?: The article does not specify gender, but the car buying trends are likely applicable to both male and female individuals within this age group.
What is their income?: Affordability being the primary concern suggests that many within this demographic may have lower disposable incomes or are more budget-conscious than older generations when it comes to vehicle purchases.
What is their lifestyle: They likely lead active lives but are more open to transportation alternatives beyond car ownership. They are also digitally savvy and responsive to targeted marketing efforts.
What are their shopping preferences in the category article is referring to: They are more likely to consider used vehicles and value affordability. When looking at new cars, they prefer smaller, more economical options and have an interest in electric vehicles. They are in-market shoppers who should be targeted with relevant inventory.
Are they low, occasional or frequent category shoppers: They are currently less frequent buyers of new vehicles compared to older generations but represent a growing segment of used-vehicle shoppers and will eventually be future new-car buyers.
What are their general shopping preferences - how they shop products, shopping motivations): They are likely to be informed consumers who research their options and value affordability and practicality. They are receptive to targeted marketing and may be more influenced by digital channels.
Conclusion: Gen Z and Millennial car buyers are a price-sensitive demographic who are increasingly turning to used vehicles and smaller, more affordable new cars. They are also interested in electric vehicles and have alternative transportation options. Dealers need to engage them with used inventory, service deals, and targeted marketing strategies to build long-term relationships.
What is consumer motivation: Steering Towards Value: What Drives Gen Z and Millennials' Car Choices?
Affordability: The primary driver is the lower cost of used vehicles and smaller new cars compared to larger or more premium models.
Practicality: Smaller vehicles often align with their lifestyle needs, particularly for urban driving and parking.
Environmental Concerns: The preference for fully electric vehicles suggests an awareness of and interest in more environmentally friendly transportation options.
Flexibility: Being open to used vehicles and alternative transportation provides greater flexibility in managing their transportation needs and budgets.
What is driving trend: The Economic Reality: Factors Behind Younger Generations' Car Buying Habits
Higher Cost of Living: Increased expenses in areas like housing and education may limit the amount of disposable income available for new car purchases.
Student Loan Debt: Many individuals in this age group are burdened with student loan debt, impacting their ability to afford a new vehicle.
Availability of Transportation Alternatives: Services like Uber, Lyft, and rideshares offer convenient alternatives to car ownership, especially in urban areas.
Used Car Market Availability: A robust used car market provides a wide range of affordable options for younger buyers.
What is motivation beyond the trend: Building a Foundation: The Long-Term Value of Engaging Younger Buyers
Future New Car Purchases: Establishing relationships with younger buyers through used car sales and service can lead to future new car purchases as their financial situations improve.
Brand Loyalty: Positive experiences with a dealership, even through used car or service interactions, can foster long-term brand loyalty.
Lifetime Customer Value: Engaging younger buyers early in their car-buying journey maximizes their potential lifetime value as customers.
Conclusions: The Road Ahead: Dealers Who Adapt to Younger Buyers Will Thrive
The declining new car registrations among Gen Z and Millennials signal a critical need for car dealerships to adapt their strategies. By focusing on providing affordable used inventory, leveraging service opportunities, stocking smaller and electric vehicles, and employing targeted marketing, dealers can effectively engage this valuable demographic, build long-term relationships, and ensure future success in a changing automotive market.
Implications for brands: Shifting Gears: Strategic Implications for Automotive Brands and Dealerships
Focus on Entry-Level and Used Vehicle Production/Sales: Brands should ensure a sufficient supply of affordable new and used vehicles that appeal to younger buyers' budgets and preferences.
Enhance Used Car Programs: Dealers should invest in their used car inventory and ensure it is well-maintained and marketed effectively to this demographic.
Develop Attractive Service Packages for Older Vehicles: Offering service deals can be a key differentiator in attracting younger customers who own older cars.
Increase Production and Promotion of Smaller SUVs and EVs: Aligning new vehicle inventory with the preferences of younger buyers by stocking more compact SUVs and fully electric vehicles.
Invest in Digital and Addressable Marketing Strategies: Shift marketing focus from broad demographics to targeted, in-market shoppers using digital platforms and addressable media.
Implication for society: Mobility for All Ages: Ensuring Access to Transportation for Younger Generations
Affordable Transportation Options: The trend highlights the need for affordable transportation solutions for younger adults as they enter the workforce and establish their lives.
Sustainability through Used Vehicles: Increased reliance on the used car market can contribute to a more sustainable automotive ecosystem by extending the lifespan of vehicles.
Shift in Car Ownership Norms: Younger generations may have different perspectives on car ownership compared to previous generations, emphasizing access and affordability over newness.
Implications for consumers: Smarter Spending on Wheels: Making Informed Choices in a Changing Market
Greater Value in Used Cars: Younger buyers can find more affordable and reliable transportation options in the used car market.
Right-Sizing Vehicle Choices: Opting for smaller vehicles can lead to lower monthly payments, insurance costs, and fuel expenses.
Exploring Electric Mobility: Younger consumers have the opportunity to embrace more sustainable transportation through fully electric vehicles.
Implication for Future: The Evolving Automotive Landscape: A Generational Perspective on Mobility
Expect the trend of younger generations favoring used and smaller vehicles to continue in the near future due to affordability concerns.
The adoption of electric vehicles by younger buyers may accelerate as technology advances and prices become more accessible.
Dealerships will likely continue to adapt their business models to focus more on used cars, service, and digital engagement to connect with younger consumers.
Consumer Trend: Value-Driven Wheels:
Name: Affordable Mobility
Detailed description: Gen Z and Millennials are prioritizing affordability and practicality in their vehicle choices, leading them to favor used cars and smaller, more economical new vehicles.
Consumer Sub Trend: Electric Dreams for the Young:
Name: Gen Z and Millennial EV Preference
Detailed description: Younger generations show a stronger preference for fully electric vehicles compared to older demographics, indicating a forward-thinking approach to sustainable transportation.
Big Social Trend: Shifting Priorities in Vehicle Ownership:
Name: Beyond the New Car Hype
Detailed description: Younger adults are less tied to the idea of owning a brand-new vehicle and are more open to other transportation options and the value proposition of the used car market.
Worldwide Social Trend: Global Affordability Challenges in Auto Markets:
Name: Youth and Vehicle Affordability
Detailed description: Affordability challenges in the new car market are not unique to the US, with younger generations in many countries facing similar financial constraints when it comes to vehicle ownership.
Social Drive: Smart Spending and Sustainable Choices:
Name: Pragmatic Mobility
Detailed description: Gen Z and Millennials are driven by pragmatic considerations, seeking transportation solutions that are both financially sensible and align with their values, including sustainability.
Learnings for brands to use in 2025:
Understand the Affordability Concerns: Recognize that younger buyers are highly sensitive to price.
Stock Inventory That Matches Preferences: Ensure availability of used cars and smaller new vehicles, including EVs.
Focus on Building Relationships: Emphasize service and long-term engagement over single new car sales.
Strategy Recommendations for brands to follow in 2025:
Enhance Used Car Offerings: Invest in quality used inventory and make it a key part of the business model.
Implement Targeted Service Campaigns: Reach out to younger owners with attractive service deals.
Invest in Addressable Media Marketing: Tailor marketing efforts to reach in-market shoppers online.
Final sentence (key concept) describing main trend from article (which is a summary of all trends specified), and what brands & companies should do in 2025 to benefit from trend and how to do it.: Adapting to the Young Driver: Car Dealers in 2025 Must Prioritize Affordability, Used Inventory, and Targeted Digital Marketing to Win Over Gen Z and Millennials
The core trend is the decreased new car buying among Gen Z and Millennials due to affordability; car dealers in 2025 should strategically shift their focus to used cars, service offerings, smaller vehicle inventory including EVs, and invest in addressable media marketing to effectively engage and build relationships with this significant demographic.
Final Note:
Core Trend: Younger Buyers Favor Used & Smaller Vehicles - A significant shift in purchasing preferences among Gen Z and Millennials.
Core Strategy: Affordability-Focused Engagement - Dealers must prioritize affordable options and build relationships through service and targeted marketing.
Core Industry Trend: Generational Shift in Automotive Market - The automotive industry is undergoing a transformation as younger generations approach car ownership differently.
Core Consumer Motivation: Pragmatism and Affordability - Financial considerations are the primary drivers for younger buyers' vehicle choices.
Final Conclusion:
The changing landscape of the automotive market, with Gen Z and Millennials increasingly prioritizing affordability and practicality over new car ownership, presents a clear directive for car dealerships in 2025. To remain competitive and build long-term success, dealers must strategically pivot their focus to cater to the preferences of this significant demographic. This involves not only offering a robust and appealing selection of used vehicles and smaller, more economical new models (including electric vehicles) but also actively engaging younger buyers through targeted service initiatives and sophisticated digital marketing strategies. By adapting their business models to align with the financial realities and evolving transportation needs of Gen Z and Millennials, dealerships can forge lasting relationships and secure their future in a transforming automotive world.
Core Trend Detailed: The Generational Divide on Wheels: Affordability Steers Young Buyers Away from New Cars
The core trend detailed in this article is the significant and growing disparity in new car buying habits between younger adults (Gen Z and Millennials) and older generations. Affordability has emerged as the primary driver of this divergence, with a substantial proportion of 18- to 34-year-olds being priced out of the new car market. This has led to a notable decrease in their new vehicle registrations, while older demographics are comprising an increasing share of new car buyers. Consequently, dealerships are facing the challenge of adapting their strategies to engage this younger demographic through alternative avenues such as used car sales, service offerings, and focusing on vehicle types that align with their budget and preferences.
Key Characteristics of the Core trend: Younger Buyers' Automotive Preferences: A Shift in the Driver's Seat
Decreased New Car Registrations: Adults aged 18-34 are registering significantly fewer new vehicles compared to previous years.
Dominance of Affordability: The high cost of new vehicles and limited inventory in lower price ranges are major barriers for younger buyers.
Preference for Used Vehicles: This demographic represents a growing segment of the used car market, seeking more budget-friendly options.
Demand for Smaller Vehicle Types: When considering new cars, they favor compact utility vehicles and compact cars.
Interest in Electric Vehicles: Younger shoppers show a notable preference for fully electric vehicles over traditional hybrids.
Market and Cultural Signals Supporting the Trend: Signs of a Shifting Automotive Landscape: Signals from the Younger Market
Rising Cost of New Vehicles: The increasing price of new cars makes them less accessible to younger adults with potentially lower disposable incomes or higher debt burdens.
Availability of Affordable Used Inventory: A robust used car market provides a viable and attractive alternative for budget-conscious buyers.
Growth of Ride-Sharing and Alternative Transportation: The availability of services like Uber and Lyft offers transportation options that reduce the immediate need for car ownership.
Environmental Awareness: The preference for EVs among younger buyers reflects a growing concern for environmental sustainability.
Digital Natives and Information Access: Younger generations are adept at researching and finding the best deals on used cars online, potentially bypassing traditional dealership models for new car purchases.
How the Trend Is Changing Consumer Behavior: Younger Generations' New Rules of the Road: Altering Automotive Engagement
Prioritizing Used Cars Over New: Younger buyers are actively seeking and purchasing used vehicles instead of focusing solely on new ones.
Driving Demand for Smaller Vehicle Segments: Their preference for compact SUVs and cars is influencing the types of vehicles they are interested in buying new.
Exploring Electric Mobility: They are more inclined to consider and purchase fully electric vehicles when they can afford them.
Seeking Value and Practicality: Their car buying decisions are driven more by affordability and practical needs rather than status or luxury.
Potentially Less Brand Loyalty: They may be more open to different brands and models in the used market compared to having strong preferences for new vehicles.
Implications Across the Ecosystem:
For Brands and CPGs:
Opportunity to increase production and marketing of affordable used vehicles through certified pre-owned programs.
Need to develop and promote smaller, more budget-friendly new car models, including electric vehicles, that appeal to younger buyers.
For Retailers:
Must invest in and effectively manage their used car inventory to meet the growing demand from younger buyers.
Should train sales staff to cater to the needs and preferences of used car shoppers.
Need to adapt marketing strategies to reach in-market younger buyers through digital channels and addressable media.
For Consumers:
More affordable transportation options available through the used car market.
Opportunity to purchase smaller, more fuel-efficient, and potentially electric vehicles that fit their budgets and lifestyles.
Strategic Forecast: The Road Ahead: Navigating the Future of Automotive Sales with Younger Generations
Expect the trend of lower new car registration among younger adults to continue unless affordability challenges are addressed.
The used car market will likely remain a critical segment for engaging Gen Z and Millennial buyers.
Demand for compact utility vehicles and electric vehicles from this demographic is expected to grow.
Dealerships will need to increasingly focus on service and building long-term relationships with younger buyers to secure future business.
Areas of innovation:
Used Car E-commerce Platforms: Developing user-friendly online platforms for buying and selling used cars with transparent pricing and financing options.
Subscription and Leasing Models for Used Cars: Exploring alternative ownership models for used vehicles to make them more accessible.
Affordable Electric Vehicle Options: Automakers focusing on producing and marketing lower-priced electric vehicles to appeal to younger buyers.
Personalized Digital Marketing: Utilizing data analytics to deliver highly targeted and relevant marketing messages to in-market shoppers.
Enhanced Service and Maintenance Packages for Older Vehicles: Offering comprehensive and affordable service plans to attract and retain younger customers who own used cars.
Final Thought: The Road to Loyalty: Building Bridges with the Next Generation of Car Buyers
The automotive industry stands at a crucial juncture, with younger generations redefining the path to car ownership. For dealerships and brands, the key to future success lies not just in chasing new car sales among a price-conscious demographic, but in strategically engaging with Gen Z and Millennials through the accessible avenues of used vehicles and service offerings. By understanding their preferences for affordability, smaller vehicle types, and electric mobility, and by adopting targeted digital marketing approaches, the industry can build lasting relationships with these long-term customers, ensuring a sustainable and prosperous future on the road ahead.
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