Selling to first-time car buyers

Last updated on April 28, 2022
Dealerships can offer first-time car buyers numerous benefits that buyers can’t get from a private sale. How can dealers leverage their upper hand?

The next generation of car buyers – millennials and Gen Z – have changed the way we interact with transportation. Typically, they want to avoid taking on debt, are keen to prioritise experiences over possessions and embrace ride-sharing services to meet their mobility needs.

It’s easy to assume that young adults have made a conscious choice to avoid owning a car. But this assumption appears unfounded. It’s clear that young adults, who make up the bulk of first-time car buyers, share the same beliefs that have motivated people to buy cars for generations. Owning a car is the ultimate ticket to freedom, it remains one of the most practical forms of transport, and there’s no greater way to express yourself than with a new set of wheels.

Now that we’re learning to live with COVID, getting back on the road is on the agenda for young adults – whether it’s travel to and from work, or finally taking those post-lockdown road trips.

How can you best support first-car buyers? Young buyers have a keen awareness of value, they know what they want and they expect to have a seamless transaction experience.

Let’s look at what dealerships can do to appeal to the needs and wants of first-time buyers.

It may not be surprising to see that an awareness of the environmental impact of car-buying is a trend among young car buyers. Although young buyers may look towards second-hand cars as they start to find their financial independence, a large number say they are also motivated to buy second-hand so they can lessen their impact on the environment.1

But private sales are also a source of concern and potential stress for this cohort. Being new to the market, these young buyers sometimes face significant obstacles. They lack the confidence to know if they are getting a good deal on a vehicle, they’re not sure if what they’re buying is suitable for them and they want peace of mind with a warranty on the vehicle they are purchasing.

This is where dealerships can demonstrate value and help young buyers navigate their first purchase. A survey conducted by Allianz found that 97 per cent of Australians who purchased a second-hand car in the 12 months to October 2021 experienced some form of confusion with the process.2 It seems that Australians buying a car privately don’t necessarily know to ask the right questions about the vehicle they’re interested in or make the right checks, such as organising a mechanics inspection or viewing the vehicle’s logbook.

Dealers are in a good position to discuss vehicle quality with young buyers and offer them specialist advice, helping them to feel more confident ahead of a purchase.

Michael Winter, Chief General Manager, Consumer from Allianz Australia, says the choice between buying from a dealership or privately is clear-cut for anyone experiencing difficulties with the car purchasing process. “We recommend visiting a dealer to explore your options and to seek advice, as they provide on-the-spot information, transparency about the vehicle as well as support you with finance and insurance.”

So, customers have a strong reason to visit their dealer when they’re looking for their first vehicle. How can dealers translate this into a winning customer experience and build relationships that last a lifetime?

  1. Understand your product. Young buyers are very likely to have researched extensively using multiple online channels. They want to know that their salesperson understands more about the vehicle they’re interested in than they do.
  2. Explain the process. Allay any fears first-time buyers may have about ‘buying a lemon’ by talking through the dealership’s vehicle inspection process, warranty protections and after-sales service offering.
  3. Know your environmental footprint. Whether it’s a new car with a great environmental rating, or a used car that still has plenty of good years ahead, helping young buyers understand the different options on the market is a great way to build confidence in their purchase decision.
  4. Be patient. Give first-time buyers the space they need to make what could be one of the weightiest financial decisions they’ve faced yet. Take time to help with their questions about finance, insurance and the purchase process.
This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 (“Allianz”). In some cases, information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way.

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