Traditional Media Nearly Obsolete Among First-Time Vehicle Buyers - RIP

Internet rated 'most important' informational tool more than radio, television, magazines and newspapers combined

SOUTHFIELD, Mich., Jan. 31, 2006; Traditional mass media has been rendered nearly obsolete among first-time vehicle buyers, according to a study released today by the Polk Center for Automotive Studies. Out of considered mass media outlets, thirty-five percent of first-time vehicle buyers consider the Internet to be their most important informational tool, compared to 8.2 percent for television, 4.4 percent for magazines, 3.6 percent for newspapers and 1.1 percent for radio.

"First-time buyers' dependence on Web-based media validates the need for an aggressive interactive strategy to court them on the manufacturer and retail level," said Lonnie Miller, managing director for the Polk Center for Automotive Studies. "The Internet's relevance in the 18-30 year age group has reached critical mass and is completely reconfiguring how car companies need to reach out to first-time buyers."

Miller predicted emerging technologies such as radio podcasts and video- on-demand will create new marketing opportunities as increased bandwidth creates a convergence of cell phones, PDAs, Internet and broadcast tools.

"Harnessing mobile media technology will be the automotive industry's most important marketing challenge -- and opportunity -- in the next decade," Miller said. "Generation Y is tuning out traditional advertising, and watching what they want, when they want. Creating breakthrough content and developing relationships with customers through emerging media technologies will separate the winners from the losers in the next five years."

The study also found first-time buyers are independent in their decision- making and rarely are compelled to visit the dealership where their parents last purchased a vehicle. Sixty-five percent of respondents said they made the purchase without any influence from family and friends and just seven percent felt buying from the same dealership as their parents was of high importance to them.

"Manufacturers should not count on automatic loyalty among first-time buyers, even if their parents are current customers. Not only is it an uphill battle to get their attention, but traditional endorsements from family members don't appear to play a large factor, especially from a retailer view," said Miller.

Jeff Martini, vice president for Polk Center for Automotive studies added, "We were impressed that nearly two-thirds of respondents had the final say when it came time to buying their first new or used vehicle. Similarly, 48 percent got the model of car or truck they set out to buy. We think this is important to help change the perception that parents always help dictate a first-time buyer's vehicle choice."

The Center study also found that the number one reason (26 percent) first- time buyers enter the market is because a previously driven vehicle, not bought by them, was no longer in working condition. Another 19 percent stated "it was time" to buy simply because they became of driving age.

Key Considerations

In addition to first-time buyers trending toward being autonomous with their vehicle purchase decisions, study results also indicate there is a demand for an enjoyable customer service and dealer experience. Forty-two percent said dealer treatment is "very important."

"It's humbling to see this segment call out the importance of how dealers treat them since so many first-time buyers continue to feel their first vehicle purchase is all about getting what they want for an affordable price," said Miller. "The results are a reaffirmation that buyers in this stage in their life walk into showrooms with similar expectations as more seasoned vehicle buyers."

Financing Behavior

Financial considerations continue to be an important factor for first-time buyers. Along with their customer service experience, monthly payment amounts, fuel efficiency, availability of affordable credit, cost of insurance and gas prices were mentioned by more than 25 percent of respondents as being "very important" in their decision process.

More than half of those surveyed state they took out a loan to pay for at least part of their purchase. In cases where a new vehicle was acquired, 65 percent took out a loan while only 46 percent of those getting a used vehicle decided to finance in some manner. Among those taking out a loan, better than 57 percent did so through their dealership while nearly 34 percent of this segment sought financing through a bank of their choice.

"From a loyalty building strategy, we think it will help lending institutions to be more empathetic to the financial challenges of first-time buyers," said Martini.

About the Study

A total of 366 first-time vehicle buyers (ages 18-30) from across the U.S. participated in this study. Respondents indicated they were the primary driver of the one new or used vehicle they acquired since October 2003. Interviews were conducted November 4-10, 2005. Complete results of the report are available on http://www.polk.com .

About The Polk Center for Automotive Studies

The Polk Center for Automotive Studies is a division of R. L. Polk & Co. that provides unique, comprehensive analyses and insight based on national or local public opinion polling and empirical Polk data. Findings from the Polk Center for Automotive Studies will provide the automotive industry and media with a deeper understanding of relevant and timely social, economic and marketplace issues affecting the automotive industry.

About R. L. Polk & Co.

R. L. Polk & Co. is the premier provider of automotive information and marketing solutions. Polk collects and interprets global data, and provides extensive automotive business expertise to help customers understand their market position, identify trends, build brand loyalty, conquest new business and gain a competitive advantage. Polk helps automotive manufacturers and dealers, automotive aftermarket companies, media companies, finance and insurance companies, advertising agencies, consulting organizations, government agencies and market research firms make good business decisions. A privately held global firm, Polk is based in Southfield, Mich. with operations in Australia, Canada, China, France, Germany, Japan, the Netherlands, Spain, the United Kingdom and the United States. For more information, please visit http://www.polk.com .