Darren Slind
Many next gen buyers don’t have the same attachment to brands. What does this mean for retailers?
The automotive industry can be a joy to work in. The history of brands and models always brings me a smile, whether with exotics new or old, classic volume brands that I grew up with, or the models I dreamed of owning.
The market has always been in flux with new brands entering and old familiar names leaving. I remember Oldsmobile, Pontiac, Plymouth, Saab, Saturn and Scion and today enjoy seeing the occasional Trans Am or 9-3 convertible still on the road. Some car brands even re-emerge in new body clothing, as with MG, MINI and Bugatti.
For the consumer, choice is growing and for the dealer, the range of franchise opportunities keeps expanding. Even with the recent import tariff brakes applied to Chinese OEMs wanting to enter Canada, there is a sense the automotive landscape will continue to change, faster than ever. Some new brands will struggle to survive, others will flourish.
Tesla is often called out as the exception, but as we witnessed the growth of Japanese and Korean brands before, if the right image alongside an attractive product, price and aftersales works — sales will come.
Indeed, Chinese brands like BYD, Chery, Lotus, Great Wall, Leapmotor, Li Auto, MG (SAIC), NIO or Xpeng — as they are in Europe, Latin America and Australia — could arrive on Canadian roads in the near future. Holding back different options for consumers will be hard if the products are competitive. Choice is important in an open market.
But choice is not only being added from the Middle Kingdom, as challenger brands like Lucid, Rivian, new-to-enter Scout, VinFast and European brands like VW Group’s Cupra may also become part of the Canadian new vehicle landscape.
With such a proliferation of brands, it is likely that some consumers will become overwhelmed.
Marketers refer to the concept of choice overload, a proliferation of options which can lead to purchase paralysis. Consumers can stumble, suffer from cognitive overload and simply revert to habit.
Like the challenge we face when visiting an unfamiliar restaurant to discover a far too extensive menu, choices become harder, decisions slower. There can be a fear of missing out (FOMO) or a need to simplify the choice and go for an easier, tried and familiar option. Often less is more.
Tesla is often called out as the exception, but as we witnessed the growth of Japanese and Korean brands before, if the right image alongside an attractive product, price and aftersales works — sales will come.
For auto retail this is becoming more of a challenge. As customer loyalty measures decline, and consumers are more open to switch brands, the need to advise consumers becomes greater.
A recent report published by Tampa-based, retail automotive marketing firm iPD Agency, shows that more than a third of U.S. customers aren’t loyal to brands anymore, with 77 per cent of GenZ adults willing to try new brands.
Consumers are more willing than ever to shop around, and not merely during the lower funnel of their buying journey but also in the upper funnel when first deciding on the brands they will consider.
A 2024 Clarify Group study conducted on behalf of the record-attended Canadian International AutoShow showed that GenZ and Millennials were the two age groups wanting to see the widest array of brands at the show.
These cohorts also had the highest intent to follow-up on vehicles they saw at the show either by going online to learn more, or to visit a dealer. Consumers, both young and old, need to see, touch and educate themselves around a changing brand and product landscape.
Research also confirms that shoppers don’t rely only on rational thinking to make decisions but also respond to emotional triggers. Management consultancy Prophet’s 2023 Brand Relevance Index® (BRI) study which looks at the drivers of the best performing brands in the US, reveals that ‘the most relentlessly relevant brands speak to the head and the heart.
These brands find ways to tap into the human side of relevance.’ Elite performers — as the report’s authors describe top performing brands — ‘deliver on the functional needs, while also connecting with consumers on an emotional level.’
With transaction prices reaching all-time records, a new vehicle purchase remains a significant investment for most consumers. This purchase also comes with an accelerating list of new powertrains, active safety, infotainment and in-vehicle connected service options that all have the potential to enhance the customer experience — if shoppers can be engaged, educated and excited to embrace them.
For dealers, their role to educate, advise and guide buyers remains as essential as ever. Automotive brands that will succeed in this hyper-competitive market are those whose retailers support customers not only with operational excellence but also with a personalized, customer-centric and emotionally inspiring purchase experience.
This is easier said than done. It requires an understanding of which established and new brands a dealer group is prepared to support and how they will be presented to customers.
The dealer, like a good restaurateur, needs to select, even curate, the right mix of offerings to their customers that highlights their expertise. For example, unless there is a strong commitment to developing a hospitality culture, retailers will struggle to achieve success with brands like Genesis, Lexus and Porsche where a personalized customer experience is central to the brand identity.
Helping customers make informed decisions without overloading them is key in a market likely to see more brands than ever. Dealer groups in particular will need to be thoughtful about which brands they carry in their portfolio to meet both rational and emotional sweet spots. In a cluttered market, shoppers need their trusted retailer more than ever.
