Despite the uncertainties plaguing the global economy, the U.S. auto industry is not only running on all cylinders, but U.S. dealers and car buyers are demonstrating robust optimism. Leading that optimism is the U.S. Hispanic auto buyer.
Following the economic crash of 2008 and a jump start from the federal tow truck, the U.S. auto industry got out of the ditch, revved up in 2010, and was back up to highway speed in 2011.
Dealers like Greenway Ford in Orlando, Ancira Enterprises of San Antonio, Mike Shaw Management in Denver and Headquarter Toyota in Miami are demonstrating robust turnaround.
According to data compiled by HispanTelligence for The HispanicBusiness 500 top companies, Greenway Auto Group ranks first in the nation in total vehicle sales among Hispanic-owned dealers; Ancira Enterprises ranks 2nd, followed by Mike Shaw Management (3rd), Cable-Dahmer Chevrolet in Independence, Mo. (4th), and Headquarter Toyota (5th). (See The 2012 Top 10 US-Hispanic-Owned Auto Dealerships.)
U.S. Hispanics are regaining economic clout. In 2012, the Hispanic market accounted for $1.1 trillion in purchasing power a figure projected to reach $1.15 trillion in 2013, according to HispanTelligence, the research arm of HispanicBusiness. Echoing those numbers, a 2012 Nielsen report projects future global purchasing prowess of $1.5 trillion among Hispanics by 2015.
The nation's Hispanic-owned auto dealers are leading the way toward a U.S. economic turnaround. Of nearly 5.5 million new vehicles sold in the U.S. in the six-month period through June 2012, more than 551,000, or about 10 percent of all new vehicle sales, were purchased by Hispanic consumers. During the same six-month period in 2011, Hispanic consumers comprised a little over 9 percent of more than 4.8 million vehicle purchases, according to Marc Bland, head of diversity and inclusion at automotive research firm Polk.
The Hispanic contribution to U.S. Personal New Vehicle sales from January to June 2012 was $13.8 billion, Mr. Bland said. Toyota, Nissan, Honda, Chevrolet and Ford were the top five brands preferred by Hispanic consumers during that time period, he added.
Since U.S. Hispanics represent the fastest-growing segment of the U.S. consumer market, it stands to reason they are in the driver’s seat of the next automobile boom in the U.S.
Automakers are consequently spending more time, money and resources on attracting Hispanics. The pace of Hispanic consumer influence will only continue growing in the foreseeable future.
Out in Force
It should be noted that Hispanics are not a monolithic demographic. National origin, socioeconomic status and what part of the country they live in have key impacts on buying patterns.
Lee Mitchell, general manager of Greenway Ford, confirmed that Hispanic consumers are out in full force this year.
The general mood of Hispanics entering the showroom is upbeat, said Mr. Mitchell of Greenway.
Mr. Mitchell cautioned, however, that with the current economic conditions, some can't help but be frugal and cautious as they make any major decision such as a vehicle purchase.
Hispanic consumers are as likely to buy Japanese midsize sedans as they are to purchase small, fuel-efficient American cars, according to Polk, and are as attracted to Ford F-series pickups as they are to Chevrolet Silverados and Ram trucks.
Annual volume of new automotive sales to Hispanics for the first half of 2012 totaled $13.8 billion, as measured from January through June; this figure represents approximately $28 billion on an estimated projected annual basis.
Since U.S. Hispanics represent the fastest-growing segment of the U.S. consumer market, it stands to reason they are in the driver's seat of the next automobile boom in the U.S. This has enormous implications for economic and political outcomes, as Michigan, Ohio, Kentucky and Indiana traditionally important car and truck manufacturing states compete with the southeast, southwest and western states, where the vast majority of U.S. Hispanic consumers live, work, and purchase vehicles.
Following National Patterns
The Center for Automotive Research think tank in Michigan estimates that the auto bailout saved 1.5 million U.S. jobs by keeping General Motors, the Chrysler Group and the companies that depend on them in business.
The increased buying power of Hispanics has carmakers scrambling to capture their collective attention and brand loyalty, said Justin Byrd, head of multicultural marketing and advertising for Chrysler. Such growth is being seen not just in traditional metro markets where Hispanics account for a large percentage of the population, but also throughout states like Tennessee and Pennsylvania in the center of the country, Mr. Byrd said.
We have a heat map of the concentration of Hispanic populations, and you see large areas all around the country in (regions) where you may not expect it, Mr. Byrd said.
Chrysler and other automobile manufacturers are spending big bucks on market research that helps them understand what motivates the Hispanic consumer to buy new vehicles. They are also spending money on what messages attract Hispanic buyers.
Mr. Byrd indicated that one of those messages is the idea of authentic and honest engagement. Hispanics, perhaps more than other demographics, want to see the specific value of a vehicle before making a buying decision.
Lots of Cars, Lots of Dollars
Hispanics account for one out of every 10 new vehicle purchases in the U.S., a number that has seen some volatility over the past five years. One way that automakers and dealers can improve their chances of gaining market share with Hispanic consumers is to openly respect and embrace their culture, Mr. Bland said.
The Hispanic contribution to U.S. Personal New Vehicle sales from January-June 2012 was $13.8 billion, according to Mr. Bland. Toyota, Nissan, Honda, Chevrolet and Ford were the top five makes preferred by Hispanic consumers during that time period, he added.
As we approach 2013, U.S. Hispanic consumers have sizeable appetites for new vehicles. An October 2012 online study of Hispanic consumers released by IAB and BIGinsight shows Hispanic consumers are considerably more confident about the U.S. economy than other Americans. The study found 54 percent of Hispanic participants were confident to very confident about the chances for a strong economy during the next six months.
This compares to 34 percent of non-Hispanic respondents who said they felt confident about a short-term U.S. economic recovery.
GMs figures for vehicle sales during October 2012 reflect the upward trend. The Detroit stalwart estimated it sold more than 200,000 vehicles in October, an increase of more than 7 percent from 2011.
It is no coincidence that when Hispanic consumers reentered dealer showrooms, the North American automotive market simultaneously surged. Nor is it coincidental that U.S. Hispanics helped turn around the automotive industry by securing the keys to the cars and trucks listed among this years HispanicBusiness.com top-selling vehicles.
Just Like US
To think that U.S. Hispanics are just like everyone else or even like each other misses a key point.
Retailers that have a strong presence in certain region(s) might think they can use the same type of message or same advertising and same layout, Jorge Lizan, vice president of business development at New York-based ICSC, told the Orange County (Calif.) Register. But they are finding thats not the case. If you are in Florida and expand to other markets, such as Texas and California, you have to adapt. You cant play it the same way.
Polks Mr. Bland added, All automakers are offering great products these days, so the intangibles are what really matters. I am amazed, for example, that more (original equipment manufacturers) dont have a (creative or advertising) agency of record that specializes in Hispanic consumer trends.
Using three such agencies has allowed Chrysler to tap deeper into understanding the cultural insights that should be a part of the companys marketing efforts.
Some of our messages in advertising that we have featured, from Live Life Your Way and Explore Life, really appeal to Hispanics, Mr. Byrd said. For us, its about what your brand image (is) and can our values match those of our consumers.
Functionality and practicality both stand out with Hispanics, Byrd added. So they are very interested in things like gas mileage. We know that with all of our demographics, but particularly Hispanics, we need to earn the opportunity for growth.
The biggest segments for Hispanics are compacts, midsize cars, compact crossovers and pickups, said Tia Hardeman, a marketing manager for GM. These segments are setting the stage for the redesigned Malibu, as well as a brand-new platform for Chevrolet Silverado and the Cruze. Chevrolets focus on space, miles per gallon, styling and technology are key features that resonate strongly with Hispanic consumers, according to GM.
Consumers no longer settle for entry-level, no-frills vehicles in order to economize, Ms. Hardeman said. As gas prices rise, so are consumer expectations for vehicles that include the latest technology, style and comfort that will help them economize.
Whether or not 2012 will mark the turnaround for the nations economic Elm Street, one thing is clear. Hispanic consumers are resilient, and they are driving again.
HispanicBusiness.com staff assisted in writing each of the articles featured in the 2012 Annual Automotive Report.
Source: HispanicBusiness.com (c) 2012. All rights reserved.