An increasingly competitive new-car market, coupled with an increasingly affluent and burgeoning Hispanic economy, is prompting auto industry leaders to refocus attention on the growing Hispanic market.
Each of the Big Three automakers now plans multicultural marketing campaigns as part of broader efforts, and advertising data detail Detroit's shifting strategies. Hispanic Business found that the industry's largest automakers spent a collective $148.2 million in Hispanic-oriented media in 2002 – up nearly 10 percent from the previous year and an increase of nearly tenfold in little more than a decade.
Industry experts say the shift from traditional mass marketing reflects a growing awareness among automakers that they need to distinguish themselves in a supply-heavy market. "When you slice and dice the census data, you realize [Hispanics are] a particularly young population and increasingly affluent ... and as [the Hispanic community] ages and expands, it will absolutely become a more potent force in the automotive market," notes Dan Gorrell, chief analyst with the California-based automotive consulting firm Strategic Visions.
While industry figures vary, in its most recent Consumer Expenditure Intelligence Report, Texas research firm Intellous says that new-vehicle spending by Hispanics grew 82 percent to more than $16 billion from 1997 to 2001. And the Hispanic share of the overall American new vehicle market rose from 4.5 percent to 6.3 percent during that period.
HispanTelligence, the research division of Hispanic Business, estimates Hispanics spent nearly $35 billion in 2002 on new and used vehicles and repairs, accounting for nearly 8 percent of the market. J.D. Power and Associates has estimated that by 2020, fueled by growing purchasing power, Hispanics' share of the auto market could grow to 13 percent.
The figures are even more impressive in the fast-growing light-truck segment of the market. In the period studied by Intellous, Hispanic spending on new trucks surged 33.7 percent, nearly triple the growth rates for African Americans and Anglos. In fact, while the Hispanic share of the light-truck market grew by 4.7 percent, it actually declined for Anglos.
Other data suggest there's reason for automakers to be optimistic about the Hispanic community. The number of cars now on American roads is quickly approaching parity with the human population. But Hispanic households are notably less likely to own or lease multiple cars, according to Mediamark Research – 32.7 percent of Hispanics, compared with 42.3 percent for all Americans. So simply beginning to close that gap would create significant sales opportunities.
The reason for honing in on a particular demographic group is clear to anyone who watches television. Prime-time TV is awash with automotive advertising, and the result is that all but the most stand-out products get lost in the clutter. "It's not a good formula," laments Gary Cowger, president of GM's North American automotive operations. "You pay more money to reach less viewers."
What's more, the new model-year is getting off to an unexpectedly slow start, a serious problem considering there's more production capacity than ever – and more products. While analysts debate the precise number, they generally agree that domestic and foreign-owned automakers will have launched nearly 100 new or significantly updated cars, trucks, and crossovers in the United States between January and December 2004. That's an increase of almost 40 percent over the year before.
|Automotive Expenditures by Hispanics (in Billions)
Figures do not include gasoline, motor oil, parking, tolls or auto rentals.
|Year||New Purchases||Used Purchases||Repairs||Total||Share of Market|
|Source: Estimates by HispanTelligence® based on Bureau of Labor Statistics Consumer Expenditure Survey, 2002|