Notes: Dollar figures in billions. Figures do not include gasoline, motor oil, parking, tolls, or auto rentals. Numbers may not sum to total because of rounding.
Source: Intellous 2003 Consumer Expenditure Intelligence Report.
Art Spinella, a researcher with CNW Marketing, believes the Hispanic new car market share is actually 13.6 percent. If he's right, it's a significant number, since Hispanics constitute 13.5 percent of the total U.S. population, according to the latest Census estimate.
One trend the analysts routinely agree on is that the figures will keep climbing. By Intellous estimates, new vehicle expenditures by Hispanics climbed 82 percent between 1997 and 2001, and total automotive spending exceeds $41 billion. During the coming decade, "the overall new car market is expected to grow an average of 1 percent annually," predicts Dave Bean, manager of product research at J.D. Power. "Hispanic purchases are expected to grow 3 percent annually."
Where Hispanics spend their money remains a point of debate. A 2003 report from Doublebase Mediamark Research finds that Land Rover has the highest share of Hispanic buyers, at 17.6 percent, closely followed by Suzuki at 16.7 percent. In contrast, the 2002 U.S. Automotive Hispanic Segment Report from J.D. Power finds Suzuki in the number one spot, but with only a 12.3 percent share, and Land Rover, at 10.6 percent, in the number four slot.
Despite the discrepancies, those are significant numbers. They not only demonstrate the size of the Hispanic market, but belie the traditional stereotype of Hispanic motorists as buyers at the lower end of the automotive spectrum.
Analysts say that in general, the Hispanic market buys a higher percentage of entry-level Suzukis, Hyundais, and Chevrolets than does the overall U.S. population. That generalization to some degree reflects affordability among the first-generation immigrant population. Reliability also is a factor.
Because of the immigrant factor, Hispanics, collectively, tend to buy the least expensive vehicles, says Mr. Spinella, but their purchases aren't significantly different from those of the overall U.S. market. And when they move upmarket, they tend to go to opposite extremes, buying high-line models and "loading them up" with extras, says Sonia Maria Green, GM's director of diversity marketing for the U.S. Hispanic market.
That comes as no surprise, emphasizes Mr. Bean at J.D. Power, since it follows the pattern of other ethnic groups as they become established members of the U.S. economy. The more assimilated, the greater the ability of the Hispanic buyer to purchase a new vehicle that mirrors the choices of the greater U.S. population, he says.
Hispanic purchasing patterns also show a preference for light trucks – a category that covers pickups, vans, minivans, and sport utility vehicles. That's logical, considering that a disproportionate share of Hispanics live in the so-called Smile Belt, the southern and coastal portions of the United States, where light truck demand is strongest.
Thus Ford's targeted marketing campaign for the F-150 is the proverbial no-brainer. The F-150 is the single most popular vehicle among Hispanic buyers, with Chevrolet's full-size Silverado pickup coming in at a strong number two, says Ms. Green at GM, according to car registration data from R.L. Polk. Ironically, Hispanics' strong brand loyalty may explain why, for many years, the Big Three U.S. automakers "closed their eyes" to the Hispanic market and didn't make much of an effort to market to its buyers, admits Ms. Green at GM.
Hispanics, she notes, have traditionally been the most loyal buyers in the U.S. automotive market, with repurchase rates running upwards of 80 percent, and sometimes topping 90 percent with vehicles such as the F-150 and the Silverado. New factors may alter that status quo. Mr. Bean insists that the newest data show Hispanics to be no more loyal than non-Hispanics. Mr. Spinella counters that Hispanics are still nearly three times as likely to stay with a particular brand, though he agrees loyalty rates are falling, and the greater the levels of income and education, the more likely a Hispanic buyer is to switch brands.
Enter the Asian and European imports. Top-tier Japanese makes such as Honda and Toyota appeal to the desire for reliable, fuel-efficient transportation. Brands like Land Rover and Mercedes-Benz have gained ground among those who have "made it," says Craig Stacey, multicultural marketing manager for Ford's Premier Automotive Group, which includes not only Land Rover, but Jaguar, Aston Martin, and Volvo. "Hispanic consumers do prefer premium brands," he says, as a way of signaling their "arrival within the community."
The upmarket shift appeals to import brands, but it concerns the domestics. GM has started listening more closely to potential customers for input on new products, Ms. Green asserts. And Ford saluted Hispanic buyers in conjunction with its centennial anniversary celebration this year (see "A Diversity Plan Turns 100," September 2003).
Communicating to a diverse community remains a major challenge for marketers. Your message may need tweaking if you're talking to Miami Cubans as opposed to Mexican-Americans in Los Angeles. But Nissan's Mr. Cropper believes that is changing as a result of mass communication and the hip-hop culture. "There is a visual language," he suggests, that "has broader influences within the [diverse] Latino community." The Japanese automaker's ElectricMoyo marketing campaign aims to ride that wave. Part of the counterculture campaign takes traditional Nissan billboards and covers them with graffiti-style messages. The campaign includes a Web site (www.electricmoyo.com), and a mobile ElectricMoyo DJ will visit 10 cities with multicultural populations. The campaign "is not for everyone," cautions Mr. Cropper, but since Nissan has a market share of just 5 percent, "we don't have to speak to everyone."
Car makers also realize they need to change on the dealer level. For most Hispanics, a car purchase "is truly a family decision process," says Mr. Stacey. Ford has instituted a special five-part training program, dubbed Insights, to help dealers understand the needs of Hispanics and other minorities. Ms. Green says GM dealers also have adjusted to the Hispanic market. One Texas retailer created a "familia room," since the typical showroom cubicle wasn't large enough to seat the entire extended family.
The new car market is only one piece of the larger automotive market. Data show Hispanics steadily increasing their purchases of used cars, aftermarket parts, and service (see table, "Automotive Expenditures by Hispanics"). At $41 billion and growing, the Hispanic car market deserves attention – and the manufacturer who ignores it will do so at its own expense.