The sustainable way to build loyalty with Gen Z and millennials.

By Aaron Basler, Senior Director of Insurance Products, Ally Financial

At a time when many Americans are reevaluating their priorities, one thing hasn’t changed: the importance of personal transportation. The question isn’t whether Gen Z wants to drive—it’s how to find a good car in today’s hot market. But not any car or truck will do, it should be good for the Earth.

Results of a recent Ally survey of 2,000 Americans should encourage every dealer to think hard about creating the best customer experience for this environmentally conscious generation.

Sustainability is a key consideration for both Gen Z and millennials. According to the survey, most consumers aged 18-40 like to thrift clothes and belongings in an effort to limit waste and their environmental impact. These values also influence how younger generations approach car buying. Among this age group, 71% say they would rather buy a used car than a new one, even as used car prices hit record highs.

Newer isn’t necessarily better

Used vehicles are not only more affordable than new, they also represent a sustainable alternative by limiting the raw materials and environmental impact associated with new car production. In fact, 63% of younger drivers who prefer used cars say it’s because they are more sustainable and draw on fewer resources than building new cars.

One more enlightening response to consider—Gen Z and millennials expect to hang onto their rides for a long time. Forty-one percent of those surveyed said they expect vehicles to last seven to 10 years.

It’s no secret that a vehicle will need to go to the shop sooner or later for maintenance and repairs. This underscores the importance of introducing your used car shoppers to the expertise of your service department—it’s a key step in building long-term customer loyalty.

Protecting the car, finances, and the planet

Many dealership sales and finance staff are well-versed in explaining how service contracts help protect customers’ budgets. Yet, younger customers are more motivated to protect the planet than save a few dollars, according to Ally’s survey. Understanding how proper repairs, quality replacement parts and, regular maintenance can help extend the life of their vehicle may provide added peace of mind as these buyers consider used versus new cars.

As further evidence of younger drivers’ environmental concern, 83% in our survey said they believe electric vehicles (EVs) are the future, although range and cost concerns persist.

While EV powertrains have fewer parts than vehicles powered by internal combustion engines, the popular notion they are trouble-free is a misconception. Recent independent reliability studies point to quality challenges for newly introduced vehicles packed with technology—including both EVs and gas-powered luxury vehicles.

It’s important to offer service contracts tailored to the customer’s needs and vehicle, rather than a one-size-fits-all approach. For example, Ally offers plans specifically geared to costly high-tech features such as LCD screens, lane departure warning systems, adaptive cruise control, and more.

Millennials and Gen Z are open to consideration. Of those surveyed, 81% said they are more inclined to purchase a vehicle service contract due to the pandemic.

As a dealer, you have a great business opportunity to serve this influential generation by showcasing vehicles that match their commitment to sustainability and offering tailored protection products that will help keep those vehicles on the road and repairs within budget.