Changes in vehicle ownership trends among Gen Z due to pandemic

It’s a rite of passage – your very first car. Most of us of a certain vintage have fond memories of learning to drive in the family car, before “upgrading” to a rusty old banger that may as well have been a Rolls Royce because it was all our own.

But in 2021, what are the youngest drivers – Gen Z – driving? According to Brian Cooke, director general of the Society of the Irish Motor Industry (SIMI), first-time and younger drivers will still seek to buy a second hand or used car.

“The purchase of a car for any consumer will come down to budget and affordability. This will be the key determinant of the make, model, spec and age profile of the car,” Cooke says.

He notes that the average price of a new car is around €30,000, pushing it beyond the price range for most Gen Z consumers, although he notes there are finance packages for both new and used cars that provide for “very manageable” monthly payments.

Yet, traditionally, vehicle ownership has not been a priority for Gen Z consumers; Cooke admits that when you factor in the cost of a car, insurance and the day to day running costs, these can be too onerous, particularly for young drivers starting out. Gen Z as a group are also more likely to take public transport and car share.

However, the most recent Carzone Motoring Report, published in February, highlighted an increase in non-drivers wanting to learn to drive, with 83 per cent of 18-24 year olds stating that the pandemic has encouraged them to learn to drive. Cooke notes that the industry is seeing strong growth in both new and used car sales across different segments and cohorts of customers.

Slightly older customers – the 25-40 age group – tend to have more disposable income, and are far more likely to look at a new or newer car than their Gen Z counterparts, says Cooke. “Features like integrated GPS or navigation system, Bluetooth, satellite radio, mobile integration etc. are more important to younger drivers. Both groups will have conducted prior researched online and are perhaps the most informed consumer groups.”

Buying patterns

Lead product specialist with Renault, Jeremy Warnock, says the manufacturer has commissioned research on buying patterns. What they’ve learned is that Gen Z buyers are likely to be saving and, in Ireland at least, are keeping an eye on getting their foothold in the property market. The research indicates that while people in this age group say they are more interested now than previously in buying a car, a majority still have no plans to, and 60 per cent are worried about their finances.

Yet Warnock notes that the Renault Bank lending data suggests that this age cohort is growing as a percentage of their overall customer base.

“This data also tells us that Gen Z buyers choose the cars best suited to their life stage – not necessarily small, but not family-focused. Obviously, compared to older age groups, SUVs are far less popular – these customers favour the dynamism of a Clio or a Mégane.”

What’s probably less surprising is that the Renault Bank data shows that Gen Z buyers are more likely to favour a used car – 70 per cent of its lending to this age group is on used cars, compared to 45 per cent across all age groups.

“It’s interesting that even though the outcomes are different, Gen Z buyers’ rational considerations for new car purchases are very much in line with buyers in all the older age groups, prioritising quality, reliability and value,” says Warnock. “It underlines the fact that whatever age you are, buying a car is a significant investment and customers want to feel their money has been well spent.”

Worth keeping an eye on is how Gen Z customers will shape the future of car purchasing and use. Warnock points out that the coming of age of this group is coinciding with widespread availability of car sharing, services which have a predominantly young customer profile.

'Priorities'

“This type of pay as you use service is very much in keeping with Irish Gen Z’s current priorities of saving and managing outgoings as they move towards a home purchase – having got used to on-demand car availability with no capital outlay, we have to ask ourselves if we will ever see anything like the same level of car purchase as in older groups,” he says.

But according to John Ryan, Dealer Principal at Spirit Volvo, if younger buyers do find themselves in a position to buy a new car, they are “very attracted” to EV and hybrid cars, just like the 25-40 age group.

“This demographic is much more eco-conscious and are looking for greener vehicles, usually moving to PHEV before going fully electric. The resale value of these vehicles is an attraction too. Other features that there are looking for include in car tech and connectivity, exterior and interior design, and safety features.,” explains Ryan.

Being digitally savvy, by the time they engage with the dealership or garage the Gen Z customer will know what they want to purchase. Cooke explains that the pandemic has helped to accelerate the motors industry into the world of digital, as sales can be conducted completely online. Retailers can engage with this audience by use different communication methods across a variety of platforms to meet how these customers interact.

“Gen Z, like every other consumer are looking for value for money and to ensure that they get a good deal, this means they tend to be less brand loyal as they will research and look for the best deal available. To attract this group retailers will have to make their purchase experience, easy memorable and accessible,” Cooke says.

Volvo has observed a major shift to online purchases, as Gen Z browse their way to a big purchase, Ryan adds.

“With no expensive holidays planned for this year, even younger customers have more disposable income and are prioritising replacing their car. Another factor driving sales is that people are more reluctant to use public transport going forward and would prefer their own car for peace of mind.”