Generational Study: How Will Your Five-year-old Finance an Automobile?

People love generational studies. The notion that being born a few years away from another person creates a disparate, irreconcilable identity is an appealing one and is, to some extent, backed by plausible evidence. After all, growing up in 1975 was different than growing up in 2005. However, when exactly those subtle differences surface to an extent where they can be measured is debatable.

That’s why I was so intrigued by a recent study indicating that Generation Z will be “nothing like their Millennial predecessors” when it comes to financing automobiles and purchasing automotive insurance. Members of Generation Z currently run between the ages of five and 21. So, how exactly will your five-year-old go about procuring coverage or a loan for their first automobile?

“Some of the biggest collisions on the horizon [will be] between the millennials and Gen Z. If people try to treat Gen Z like the millennials, that will backfire,” David Stillman, co-founder of Gen Z Guru in Minneapolis and co-author of the book Gen Z @ Work: How the Next Generation is Transforming the Workplace told Automotive News.

Stillman claims Generation Z is so incredibly tech savvy that they’ll use their phones to shop around for a better deal — which sounds quite a bit like what we’ve heard about Millennials in the past. Likewise, it isn’t as if Boomers and Gen Xers don’t have the means to hunt for a favorable insurance rate or auto loan. They are simply less likely to whip out their phone in order to do so.

“Gen Z can quickly look on their phone as to where they can buy the products cheaper, and it’s not scary to them,” said Stillman. “It’s probably easier for them to do that,” he said.

Profound. Okay, so Gen Z really likes smartphones.

They also won’t have the patience to do paperwork, according to “generational experts.” But a lack of patience is fairly common with any fresh-faced demographic. I wouldn’t expect a five-year-old to be willing to sit through a speech about contract clauses without needing a juice break for more than a couple of minutes. While most will eventually grow out of that trait, as the bureaucracies of the world gradually beat that instinct out of them, Stillman claims even the adults of Gen Z will be incapable of wading through “reams of paperwork” in an F&I office and are likely to do all of their research ahead of their trip to the dealership.

The solution, as Becky Chernek, president of Atlanta’s Chernek Consulting, sees it, is to ensure a tech-based approach that puts the product up front while providing transparency. Apparently, Generation Z will be also able to sniff out being swindles better than the older generations. If you’re a dealership that doesn’t adopt a online solution that allows for “self-desking,” Chernek claims you’ll be in trouble once baby can drive. Youngers will have already checked out fair prices and used third-party apps to handle their financing and leasing, leaving you with no sale.

The digitization of car sales is likely the most useful portion of this study. We’ve already seen retail chains obliterated by online shopping and there’s no reason to think the automotive industry won’t eventually endure similar challenges. But what if you’re on the receiving end of Generation Z’s wrath?

According to Stillman, they’re highly competitive. Dealing with a Gen Z salesperson will be like surviving an encounter with a caged tiger with genius-levels of intelligence. Stillman says that, unlike millennials, Gen Z grew up without participation awards — a claim I could absolutely not verify with research. But that apparent lack of emotional coddling has turned them all into cold blooded success stories. “This idea of fairness doesn’t work for them,” he said. “If you don’t reward them, they will have their side [job] and figure out other ways to make money.”

Dont’ worry, says Chernek, they’ll offer a square deal. She claims that, despite this need to achieve, Generation Z is interested in “being real and meeting customers face-on, being really upfront.”

All of them, I guess.

The entire profession of predictive analytics seems highly speculative and Generation Z doesn’t sound all that different from when people were still calling Millennials “Generation Y.” It’s one thing to assess consumer trends using actual data, but this sort of precognitive market advice seems generally worthless. Overgeneralizing is already it’s own sin, but most of these kids don’t even have a driver’s license yet.

That doesn’t mean we should ignore everything Stillman and Chernek are saying, though.

For one, technology will play a more important role in the future of automotive sales. We’ve already seen that trend taking hold with online inventories and online showrooms that allow you to effectively option and order a new model. But that won’t be exclusive to younger generations. Small children weren’t the ones that started putting Sears out of business.

Chernek wants dealerships to ask themselves if they’re going to be Blockbuster or a Netflix in the years to come. And that’s a probably the best takeaway from this study — not that Generation Z won’t settle for less, but that almost no one wants to schlep all the way to the showroom when they don’t have to.

As for what your five-year-old’s preferred way of getting an auto loan will be, it’s probably still too early to tell.