By on October 9, 2017

baby driving
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.

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29 Comments on “Generational Study: How Will Your Five-year-old Finance an Automobile?...”


  • avatar
    PrincipalDan

    All I know for certain is that my 3 year old daughter loves her 6-volt electric ride on MB AMG SUV – pink and plastered in Disney Princess decals.

  • avatar
    VoGhost

    The business of selling cars to the next generation increasingly sounds like Blockbuster. Hint: Uber already wrapped it up.

    • 0 avatar
      S2k Chris

      Yeah, I’ll be happy if my girls BUY cars instead of just summoning a self-driving transportation pod from their iPhone implant.

      But my older one loves riding with Daddy in “red car” (my S2000) so there’s hope. She wants to learn to drive it so she can teach mommy how (mommy doesn’t drive stick shift).

      • 0 avatar
        sportyaccordy

        I’d actually hope the opposite. Car ownership comes with a lot of needless expense, both in money (real estate and fees for parking; insurance; road tax) and time (maintenance visits, time spent looking for parking). I’d much rather my girl do the whole ride sharing thing to get around and be involved in some kind of motorsport on her free time (karting, sim racing, rent-a-car track days) than lease a BMW 3er and not know or care about how it works….

        • 0 avatar
          S2k Chris

          “Car ownership comes with a lot of needless expense, both in money (real estate and fees for parking; insurance; road tax) and time (maintenance visits, time spent looking for parking).”

          Logic would tell us that all of those costs + profit will be baked into the cost of participating in a shared ownership model. Unless we have some sort of complete paradigm shift (100% remote work, etc) or she lives in a place where she doesn’t commute via car, in order for there to be always a car ready to use at a moment’s notice, there will need to be a large enough supply of vehicles and the costs will be similar and spread appropriately.

          • 0 avatar
            VoGhost

            Keep in mind, if you are 1 of 50 people who take a given Uber today, you only pay 2-3% of the fixed costs.

          • 0 avatar
            brakeless

            If you ride Uber and don’t tip the driver, you are getting a heck of a deal.
            I tried it once, and gave up after giving eight rides with no tips. Every single passenger appeared to be a college student/millenial. They either don’t know about tips, or figure this guy doesn’t need any money because he is so rich that he owns a car. Or maybe I just smell bad.

          • 0 avatar
            S2k Chris

            “They either don’t know about tips,”

            Uber was no-tipping until recently. They had no provision for giving tips except handing the driver cash, and one of the biggest draws of Uber was not dealing with cash and paying a pre-negotiated exact price for the service that you knew before you stepped foot in the car. So complaining about not getting tips as an Uber driver up until very recently is like complaining about not getting tips as a McD’s order taker.

          • 0 avatar
            S2k Chris

            “Keep in mind, if you are 1 of 50 people who take a given Uber today, you only pay 2-3% of the fixed costs.”

            Correct, but I bet that changes dramatically if I decide I need to Uber every day at rush hour time. Uber can’t be the answer for everyone at the same time or it won’t be any cheaper.

  • avatar

    This is just idiotic. Predicting generational adult behavior from a group of children, all the while assuming the future of social, economic, regulatory, and technological advances – and ending up with a conclusion of “Millennial +.”

  • avatar
    28-Cars-Later

    “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.”

    What the f**k is this?

  • avatar

    Hmm. If you asked back when I was five, everyone wanted cars, affluent folks actually purchased and traded in cars every 3-5 years, and they owned, not leased, those cars.

    No one could have predicted that taxes, health insurance, the price of housing and higher education would so skyrocket. No one could have predicted the gutting of the working class through “trade deals” and “right to work” (for less).

    Certainly, no one would have predicted that we all would have a device to allow us access to anything anywhere in the world, pretty much right now, nor that the rigid top-down delivery of news and entertainment would become a mostly level point-to-point.

    No one would have predicted that we’d all willingly geo-tag ourselves at all times with this information used by corporate America and our government.

    You’ll probably access transportation per the rules of the corporate state you belong to.

    • 0 avatar
      krhodes1

      Affluent people still buy (buy, not lease) cars every 3-5 years (or whenever they darned well please) in my experience. There are simply fewer affluent people around.

      A funny thing seems to be happening to all these “so different” Millenials – as they get older, they are turning into their parents. Happens to us all, more or less. That cool carless life in the trendy downtown area is a lot less fun with a couple of kids.

  • avatar
    ClutchCarGo

    “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”

    Retail chains lacked the organized lobbying that auto dealerships have. If they did, Amazon would never have gotten beyond book sales. It will take more than 15-20 years to break their stranglehold on state legislatures.

  • avatar
    PandaBear

    A lot of the cars we bought are there for the “just in case” moment. People buy big cars so they can use it to take trips, buying two cars for a household that have 2 people taking public transit to work just in case they need to go in early or late that day or pickup kids. Buying an SUV just in case we need to take a camping trip, buying a pickup truck just in case we need to haul home improvement stuff.

    Most of these just in case stuff will be gone in the future when delivery gets cheaper and hauling a last minute ride is much cheaper. Everything idle is now making money as long as you have a computer algorithm on the pricing. Servers CPU cycle and RAM, network bandwidth, cars, a vacation home, conference room, self storage, office space, your internet connection, etc.

    People will also likely work remotely a lot more, and therefore commute a lot less. They already order stuff online, all they need to do is to figure out how to share a locked refrigerator for groceries pickup on every street corner and they won’t need to own a car.

  • avatar

    “But that apparent lack of emotional coddling has turned them all into cold blooded success stories. ”

    Does it mean that Gen Z are no snowflakes anymore and can survive if opponent’s opinion differs from whatever they were brainwashed with in college? Or even challenge college brainwashing itself?

    How about Gen Z fighting in the next world war (with China, Russia, whatever next great power would be). Will we call it World War Z?

  • avatar
    Big Al from Oz

    I really dislike the way we classify ourselves.

    Boomers, X, Y, Z and millenials.

    The reality is they react to their environment. Myself as a so called Boomer would hold the views of most the other generations.

    Even in the 70s you could not predict your retirement let alone what vehicle you will own 40 years later and be 25% accurate what you would own in a decade.

    We live by our aspirations and dreams, each generation. When they don’t come to fruition as we envisage, we tend to blame others, even countries are like this.

    What will drive the next generation?
    1. The US economy, cost or expense
    2. US global integration (or not)
    3. War, the cost
    4. Technolgy
    5. Environmental concerns
    6. Education and employment

    All of the above variables affect each generation as in the past.

    So, the the millenials will respond to each dimension as how it impacts them proportionally. Again no different than previous generations.

    • 0 avatar
      brn

      Generations are one of many factors that impact how we behave. My grandmother raised six kids in the Great Depression. You couldn’t get her to throw out a paper bag. 15 years ago, my younger cousin was outraged when the bank wouldn’t give him a as large a house loan as he wanted. He was unable to understand the bank was doing him a favor.

      Do these things define us? Nope. They simply contribute to our definition.

      • 0 avatar
        Big Al from Oz

        brn,
        What you state is true, but did if your Granny lived to the same standard of living as we have things would of been different.

        Even though we complain how bad we have it, the reality is we have never had it so good overall.

        Statements like but we are worse of than a decade ago or whatever is of no real significance. It’s harder to measure the impact of tech in our lives.

        Tech given us a higher standard of living, now tech is moving across the world and we complain that others are using this tech to compete.

        The same can be said for people within a society. Look at the difference between US States in the standard of living. The same can be said within States and even cities and small towns.

        People soon forget even though they might be a little further down the socio economic ladder now, their lives might be better than a person in the same socio economic group 6 decades ago.

        What occurs is people state it’s not fair that we live like this and you can afford these other luxuries, when most of the items in the “poorer” persons house might of been a luxury 6 decades ago.

        Looking across socio economic groups you will see different cultures and ideas, even among Millenials, just as Boomers had different groups and some with the same attitude as current Millenials.

        I consider myself more of a Y generation, with my outlook and attitude even though I’m a Boomer. To me most Boomers are crusty old farts with a poor vision of the world. They are selfish, very selfish and mostly narrow minded.

  • avatar
    brn

    Gen Z will use cell phones? You mean they’ll use what the rest of us already use? The only difference is that they might rely on it a little too much? It’ll dumb them down to the point they’ll trust whatever app Goggle, MS, or Apple tell them to, with a kickback coming in the back door?

    Everything needs a balance. The so called super savvy types that rely on something that’s oversimplified, are just setting themselves up to be lemmings.

  • avatar
    threeer

    Not 100% sure HOW, but for HOW LONG?? I can see somebody going in to buy a car in the (not so distant) future and securing their “once in a decade” loan for their new Transapod (TM) device.

  • avatar
    notapreppie

    Given the way things are going between Cheeto Boy and Rocket Man, I think it’s a bold assumption that the next generation will have cars to finance and insure.

  • avatar
    brakeless

    In the future, Gen Z will wear iPhones implanted into their eyes. They will summon autonomous zero-emissions Amazon-owned personal transports with their thoughts, so there will be no interruption to the posting of govt-mandated hourly facebook status updates. The car enthusiasts will be pushed to the fringes of society. They will colonize around dilapidated oil rigs and refineries, waging war with other car enthusiasts and the U.N. for control of bootlegged gasoline supplies. They will communicate with CB radios and paper. Any car enthusiasts accused of having an iPhone or facebook account will be executed on the spot. It won’t be pretty.


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