Tag Archive | "millennials"

Millennials Want to Buy Cars, Study Finds

SAN FRANCISCO — Findings from the 2016 Credit Karma Millennial Report reveal that 90% of Millennials throughout the country currently own a car or want a car.

Less than 8% of respondents stated they did not own a vehicle and did not have plans to buy one. Notably, the company added, the increasing prevalence of ride-sharing companies in big cities has not had much of an effect on urban and suburban millennial car ownership.

For its report, Credit Karma surveyed more than 1,000 people between the ages of 18 and 34 on car ownership and their plans to buy an automobile. Contrary to common perception, the company stated, Millennials overwhelmingly demonstrated a passion for driving and owning a car. Many stated they would devote a significant portion of their income to secure a vehicle.

The following are additional findings from the study:

  • 78% of Millennials already own a car and the majority (55%) bought or plan to buy their first car before their 22nd birthday.
  • Fewer than 8% said they did not own or plan to own a vehicle.
  • Despite the increasing prevalence of ride-sharing companies in big cities, the difference between urband and suburban millennial car ownership trends is only 5%.

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In Uncertain Business Environment, Millennials Want More Risk

According to a new survey, Millennials may not be as short-sighted as older generations would have you believe—especially when it comes to owning or starting a business, reports Fox Business.

The Wells Fargo Millennial Small Business Owner (SBO) Study found that a strong majority (80%) of Millennial Entrepreneurs, born between 1982 and 1997, say they plan to grow their business over many years, and eventually pass them down to children–even though 59% reported not having kids yet.

According to the research, these small business owners, ages 19 to 35, see their ventures as long term investments—and they’re more willing than the older generation to take financial risks to grow.

“We found that Millennial small business owners have a much longer-term horizon for their businesses than many may perceive them to have,” said Lisa Stevens, Wells Fargo’s head of Small Business. “They recognize an investment in their business is an investment in their future.”

Market research firm GfK interviewed 1,005 entrepreneurs who’d been in operation for at least six months, full or part-time. Those interviewed were also required to be the primary or shared financial decision maker, own at least 50% of their business, and report annual business revenue of up to $5 million.

Millennials surveyed differed most from older small business owners in their willingness to take on business debt, even though both generations reported being equally wary of owing money.

Two-thirds of Millennial small business owners said they believe it’s important to take on some amount of debt for growth–even if it means opening, carrying a balance on, or maxing out personal credit cards–while just half of older SBO’s agreed. Further, 21% of Millennial small business owners said they expect to take on some form of debt next year.

Small Business Segment Manager for Wells Fargo Doug Case called these findings an important revelation.

“I’m surprised that this generation, having such an affiliation with the Great Recession, has that enthusiasm around growth and are big dreamers and planners,” Case said. “I thought it was great to see that, even with the financial environment they’ve seen, and also the fact that a lot of Millennial business owners carry debt from school. It’s encouraging that those realities have not dampened their spirit.”

Members of both generations said they started their businesses to gain control of their futures, become their own bosses, and have more flexibility in where, when, and how they work. But Millennials are more likely than their older counterparts to begin a business venture because they’re passionate about it.

“They live and thrive off of the future and the next plan,” Case said of Millennial small business owners. “It’s driving more of an immediacy and technology-driven business operations. It’s requiring [businesses] to become tech savvy.”

Despite economic headwinds and heightened volatility on Wall Street, three-fourths of Millennials said they are optimistic about business growth in the coming year. That’s compared to just half of owners 36-years old and up.

But could that optimism be resting primarily on a lack of world experience?

According to Case, an alarming number of Millennials don’t have business plans, though he said their strong sense of entrepreneurship and dedication to survive and thrive is a good place to start.

“The challenge for all Millennial small business owners will be around creating sustainable business models,” Case said.

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Jumpstart: 60% of Millennials Buy a New Vehicle Every Three Years

SAN FRANCISCO — Millennials are not only interested in purchasing cars, they’re also cycling in-market more frequently due to changing life stages. This was just one of the findings from “Today’s Auto Shoppers: How They Research and Why Trust is So Essential in Winning Them Over,” a new study conducted by Jumpstart Automotive and Ipsos Connect.

According to the study, four in 10 shoppers buy a new car every three years, while nearly six out of 10 millennials pull the trigger on a new vehicle every three years. The study also showed that 74% of Millennials now take four weeks or less when shopping for a car, with 88% of them researching online throughout the entire process.

“The results of this study illustrate that people are similar in the way that they gather information. But there are both subtle and significant differences between demographics,” said Libby Murad-Patel, vice president of strategic insights and analytics for Jumpstart. “Our hope is that brands across the entire automotive spectrum use these insights to help elevate the shopping experience for all consumers.”

Technology, the study found, is popular across all demographics. However, the ability to seamlessly integrate smartphone apps and functions into the vehicle has become more important to car buyers than a vehicle’s custom tech features.

The only exception would be women, who influence 80% of all vehicle transactions and place a greater value on practical needs such as passenger seating, comfort, and safety. And although women are primarily new-car buyers, they show more willingness than men to consider a used vehicle if it means they’re going to get more for their money, according to the study.

Additionally, women tend to rely heavily on independent research and reviews. They are also more likely to consult Consumer Reports than any other group.

The study also found that Asians and Hispanic shoppers place a greater emphasis on brands or vehicles that are more popular or recognizable, as well as vehicles with alternative fuel options. Overall purchase price is important to Asian shoppers, but they show more willingness to increase their monthly payment if they feel the value is there.

Hispanic shoppers rank purchase price higher than monthly payment, but monthly payment is a higher consideration for them than any other group.

Additionally, Asian consumers have a higher affinity for luxury vehicles, according to the study, while Hispanic shoppers tend to purchase more new vehicles than used. The latter also tends to hold onto a vehicle and pass it down to a family member instead of trading it in, making trade-in offers less relevant to this group, the study concluded.

The study also found that quality/reliability has become more important than fuel economy across the board. Part of that could stem from the current recall-heavy environment, according to the study’s authors, as well as low gas prices.

When consumers begin their research, according to the study, the Top 3 must-haves in a brand or vehicle are good value at 77%, a reputation for being strong and reliable at 68%, and a reputation for excellent quality at 65%. When it comes time to buy, quality (34%), gas mileage (29%), and price point (28%) become the Top 3 key influencers for all shoppers.

“This study paints a vivid portrait of today’s auto shopper: informed, empowered, value-oriented, and brand-focused,” said Dr. Stephen Kraus, chief insights officer for Ipsos Connect and director of the study. “The research also underscores the crucial importance of the Internet, as 80% research online throughout the purchase process, not just as the purchase becomes imminent.”

The study was conducted by Ipsos Connect between December 2015 and March 2016, with 1,014 U.S. respondents interviewed online. Study participants met the following three criteria: adults aged 18-64, at least $30,000 in annual household income, and purchased a vehicle in the past year or intended to purchase a vehicle in the next six months.

To download the study, click here.

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An Interview With Dean Harrison

Dean Harrison is president of Maximus Auto Group, a New Albany, Ind.-based F&I product and training provider with dealer clients throughout the United States. Agent Entrepreneur sat down with Harrison to get an inside look at MyCar Mobile, an app the company developed to help dealers connect with Millennial car buyers and, with time, build the brand loyalty most marketers say is lacking in younger generations.

AE: What’s on your mind as we begin the New Year?

Harrison: I’m very interested in Millennials and how they interact. They are the next generation of car buyers and they’re really starting to come into their own. What can we do as a product administrator to target Millennials so dealers can maintain them as customers down the road? If we can figure out how to treat Millennials, we’re doing a great service to our dealers.

AE: Do you agree with those who say Millennials have less brand loyalty than prior generations?

Harrison: There’s research that says Millennials actually are very brand-loyal. And we all know Millennials like ease and convenience. They want ready access to data and information. I believe we have an opportunity, through online and social media platforms, to provide that. So the question is not whether they have more or less brand loyalty but how dealers can build loyalty in their own brand.

AE: How do they do that?

Harrison: Interact with young people on their level. Eighty-five percent of Millennials have and use smartphones. One in five are using it exclusively for Web browsing. They’ve given up the desktop and the laptop. In response, we developed an app we call MyCar Mobile. When a Millennial buys one of our F&I products, our app makes it easy to learn more and makes the claim process very easy. They’ve got access 24 hours a day, 365 days a year.

Millennials don’t want to pick up the phone and call somebody when they have a problem or a question. They want to get the answer from their smartphone. If they can, they will reward the provider with loyalty. And we custom-brand the app to the dealership. So every time they use it, they think of the dealership, because the dealership’s name and contact information is front and center.

AE: And the app has to work.

Harrison: It has to work and it has to be easy to use. We built MyCar Mobile so that anybody can pick it up and use it. A first-time user can find and hit the “How to File a Claim” button. It knows what products and what coverage each customer has. And not only can they can do everything right on their mobile device, the dealer can use the app to send push notifications back to the customer. As soon as the customer files a claim, they see that their status changes and they know they’ll be continually updated by push notifications.

AE: Are they introduced to the app at the dealership?

Harrison: Ideally, yes. We have to make sure the dealer does a good job of communicating that the app is available to them. They can download it from the Apple or Android app store while they’re still at the dealership. If an F&I manager has time, they can go over it with them.

It’s a very good customer service tool. Some customers still want to make that phone call and talk to a live person. If that’s how they want to interact, that’s fine. They’ll just use the “Customer Service” button. If they want to talk to their dealer, they will see their contact information.

I want to allow customers to interact with us, however they want to do it. And you’re absolutely right. It should be introduced at the store because dealers should want their customers to have the app. Get it installed on their smartphone. Tell them what it can do and how to do it.

AE: Where exactly did the idea for the app come from?

Harrison: It came from my desire to provide the best customer service in the industry. We looked at where customers would be in the future. How can we provide dealers with the right level of service? All the research we’ve done tells us this is where the customer is gravitating. They are moving toward the mobile device.

AE: Do you believe Millennials could ultimately buy more F&I products than older customers?

Harrison: Look, budgeting is a way of life for Millennials. They’re coming out of college with almost $30,000 in debt. They’re forced to budget. They don’t have a lot of discretionary income. They may not be aware of unexpected expenses that can occur. We’ve all had flat tires or lost a set of keys. Today’s keys are expensive, and we are seeing an increase in key claims. Many Millennials don’t realize how expensive these items can be, so we need to focus on how they can budget for these out-of-pocket expenses.

Another area I think is very important to consider is that they are very well-researched. Many of them may be aware of what GAP is, but they may not be aware of how valuable it can be. Credit.com recommends putting 20% down on your new-car purchase because cars typically lose 21% of their value in the first year. However, according to an Edmunds.com survey, the average Millennial is only willing to put $3,000 down on their vehicle purchase. We know that the average new-car transaction is over $33,500, so if Millennials want to stay in line, they would need to put $6,700 down — and that’s before taxes and fees.

With the right presentation, Millennials should absolutely be great customers for F&I products. But they want to be educated. They don’t want to be advertised to or marketed to. They want to be educated and make educated decisions.

AE: The app sounds like an expensive project. Why take the risk?

Harrison: Building a full-featured, full-functioned app takes a lot of time, effort and development cost. The decision for me was not so much based on how quickly we would make that money back. I pushed for the app because I knew this is where I wanted our company to be.

I came out of the retail industry. I sold cars and I sat in the F&I office. I know that, if the product doesn’t perform up to the customer’s expectations, it’s a bad deal all around. I never wanted to put one of my dealers in that situation. So, ultimately, moving forward with MyCar Mobile was a pretty easy decision, because it’s the right thing to do for our customers and our dealers.

I’m optimistic that our investment will pay off for everyone involved. In our industry, change is constant. Our customers are always evolving. I want to be able to provide the tools dealers need to keep up.

And let’s face it, many dealers are set in their ways. They can be slow to change. And I think one reason may be that they don’t know how. What is the next step? If I can help a dealer in that regard, if I can make it easier for the dealer to take that next step, that’s what I want to do. We’re going to assist the dealers in this process and help them get back some of the brand loyalty they’ve been missing.

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How To Effectively Mentor Millennial Employees

According to the Millennial Majority Workforce Study, 53% of hiring managers say it’s difficult to find and retain millennials. There are many reasons behind the retention problem, ranging from insufficient flex time to using outdated mentoring processes and not providing a sense of value in their work. But they all point back to the same underlying issue: Millennials want more from their jobs than just a paycheck, and they need more engagement.

No one said finding, onboarding, and working with millennials was easy. But you can quickly resolve millennial mayhem by spending time mentoring these employees. Taking the time to help cultivate their careers can help them reshape their expectations and understand their unique career trajectories, dramatically reducing employee turnover. Here’s how to effectively mentor millennial employees and actually see results.

Shake Up Your Mentoring Program
Corporations with long-standing mentoring programs need a shake-up to attract and retain the younger generation. These types of programs typically take months to set up. But millennials are notorious for career-hopping and moving on quickly if a job doesn’t prove to be a good fit.

Act swiftly and take the initiative if you’re planning to mentor someone. Assigning mentees to shadow managers and supervisors does little if there isn’t an authentic connection and reason for them to be there. Give your mentees some autonomy in who they seek out as mentors, and allow them the flexibility to step outside your mentoring program and shake things up.

Consider Long-Term Goals
Mentoring a millennial can be a somewhat fluid and flexible process, but should still have long-term goals and benchmarks. Determine what your own goals are, whether to prepare them for upward mobility or to gain insights on how to recruit and keep a new wave of hires.

Remember that millennials tend to be goal-focused after growing up in an era when kids won a trophy for showing up and trying their hardest. Leverage this passion for goal setting, and take a genuine interest in their long-term career and future. Set goals for their career trajectory and design a way to measure their progress, whether through status reports or giving them responsibility for larger projects.

Master Face-to-Face Interaction
Millennials grew up in the age of texting, emailing, instant messaging, and getting instantaneous feedback. That doesn’t mean they don’t ever want face-to-face contact: What it really means is they want some type of connection. But don’t just assume millennials should know what to expect and how to conduct themselves in face-to-face situations in the business world. There will still probably be pushback on issues that can’t be wrapped up in an email or a quick text.

Part of mentoring a younger, technologically-advanced generation is giving them insights into your industry and the business world at large. That means teaching them how to sit in a meeting with investors, attend networking events, or close sales.

Explore Value Over Compensation
It’s refreshing to see a generation that isn’t that motivated by compensation in comparison to value. Part of their indifference to compensation comes from watching their parents’ generation dedicate themselves to a company only to get let go without a severance. Why should they put so much emphasis on compensation if they know it’s not a guarantee for security or success?

Figure out what your millennial employees actually care about. Millennials have also been told their entire lives that they can be whatever they want and should follow their passions. Give your millennials a framework to show them how their jobs offer value to society to keep them committed. They want a bigger purpose, so give it to them and see how far they take it.

Use Teamwork
Millennials are team players and value group interaction. Sticking them in a room to listen to their supervisor drone on about the latest in SaaS trends isn’t going to do you any favors. There was an interesting in article in Bloomberg called The Misery of Mentoring Millenials that shed some light on this teamwork mentality. Millennials prefer having a group of mentors to turn to, depending on who holds the expertise for the particular problem they’re facing. Aside from being an effective way of mentoring, it can also relieve a single mentor from being responsible for the outcome of the experience.

Respect Their Need for Encouragement
Many business leaders see millennials as needy and too sensitive. There may be some truth to that, but consider the era of their childhood. They grew up with non-stop feedback and self-congratulatory posts via social media updates. Like it or not, this is their reality.

Millennials don’t necessarily need special time set aside to talk about how great they are. But they do seek out feedback and want a little encouragement that they’re on the right track and delivering. Spending just a few minutes a week to check in can help build trust with your millennial employees and make them feel valued.

There are probably business owners who will shrug off that idea, but they are actually missing out. Giving millennials that boost of encouragement can increase their productivity and commitment to your company.

Go the Reverse Mentoring Route
The rising trend in corporate mentoring is going the reverse mentoring route. It’s a smart move and we should have been building on this concept years ago. No one is suggesting that millennials don’t need older mentors who are established in their fields and can share insights from their decades of experience. But those older mentors also need input and feedback from millennials on social media, finding the right influencers to promote content, and the latest technology trends. Such mentorships should be mutually beneficial, engaging and give-and-take in terms of time commitment.

This article was written by Chad Halvorson and published in Inc.

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TransUnion: Auto Loan Growth Driven by Millennial Originations

CHICAGO — The millennial generation is the fastest-growing segment of auto loan consumers, according to TransUnion’s latest auto report. Millennials — consumers born in 1981 or after — represented 27% of total auto loan originations in 2014, up from 16% of total originations in 2009.

Millennials’ total outstanding auto balances have increased 23% in the past year, the highest of any age group. Average opening loan balances for this generation grew 4.1% year over year, up from $17,942 in 2013 to $18,678 in 2014.

“The growth in millennials’ auto loan originations dispels the common myth that millennials are not buying cars,” said Jason Laky, senior vice president and automotive business leader for TransUnion. “The growing average loan balances for millennials, combined with stable delinquency rates, indicate that we are still in the midst of a strong auto lending environment.”

At the end of 2014, auto loan delinquency rates remained relatively flat, with the 60-day auto loan delinquency rate moving from 1.14% in Q4 2013 to 1.16% in Q4 2014. The account-level and consumer-level delinquency rates were unchanged from the prior quarter. Auto loan debt per borrower rose to $17,453 in Q4 2014, marking the 15th straight quarter of increases.

Auto loan delinquency rates increased in 27 states on a year-over-year basis, with the largest moves coming in Arkansas (up 15.7%) and Nebraska (up 10.5%). The largest declines occurred in Oklahoma (down 18.6%) and Alaska (down 16.1%).

Auto loan debt per borrower rose 4.1% from $16,771 in Q4 2013 to $17,453 in Q4 2014. On a quarterly basis, auto loan debt increased from $17,352 in Q3 2014. Auto loan balances rose in every state between Q4 2013 and Q4 2014. States experiencing the largest increases in auto loan debt included New Mexico (up 6.7%), Texas (up 5.8%) and Georgia (up 5.5%).

TransUnion recorded 64.8 million auto loan accounts as of Q4 2014, up from 60.5 million in Q4 2013. Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased to 7 million in Q3 2014, up 5.1% from Q3 2013. Of the new auto trades, approximately 1 million were concentrated within the subprime tier (those consumers with a VantageScore 3.0 credit score lower than 601), essentially flat from Q3 2013. Prime or higher tiers (those consumers with a VantageScore 3.0 credit score higher than 660) represented 64% of new auto trades, also flat relative to Q3 2013. The subprime delinquency rate increased from 5.72% in Q4 2013 to 5.92% in Q4 2014.

“Access to credit is expanding for American consumers, especially in the non-prime and subprime risk tiers” said Laky. “Lenders are apparently taking advantage of a strong economy and robust auto market to find profitable lending opportunities beyond the limits of traditionally low-risk credit tiers. And given the fact that delinquency levels remain near historic lows, that strategy appears well justified.”

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