Generational shifts and the rise of digital are transforming the luxury and exotic automobile market. Younger buyers, particularly millennials and Gen Z, are less loyal to individual brands and increasingly likely to buy a vehicle online. And while most older buyers still favor traditional bricks-and-mortar dealerships, they are also turning to the internet in greater numbers to carry out research and even make a purchase.
These are among the findings in a new report by BCG and duPont REGISTRY Group, which looks at how high-end automobiles are helping to define a rapidly evolving luxury lifestyle ecosystem. Players, including brands, dealers, and marketplaces, will need to adapt to these changing preferences to secure their market position and capture future growth.
According to the report, the US total addressable market for vehicles priced at or above $100,000 is projected to rise by a compound annual growth rate of 5% to 7% through 2035—reaching a market value of between $180 billion and $215 billion. Sales of used vehicles are projected to grow up to 1.5 times faster than those of new ones thanks to high new automobile prices and an ever-growing supply of secondary market inventory.
By interviewing leading stakeholders and surveying over 400 current and prior collectors and prospective buyers, the report’s authors found that, while buyers remain enthusiastic about purchasing a luxury or exotic automobile, preferences are changing across the customer journey:
- For most respondents, shopping was a near-constant activity. About 80% of buyers browsed the internet at least weekly even when they didn’t have an immediate intention to buy. Once they had decided, however, around 70% of respondents completed their purchase within a month.
- While a large proportion of buyers across all age groups favored a couple of anchor brands (notably Porsche and Ferrari), millennials and Gen Z respondents were more willing to cross-shop and consider other brand options.
- Across all age groups, one-third of buyers cited emotion-based factors as the primary reason for purchasing a vehicle. However, younger buyers were more likely to view a luxury automobile as an investment opportunity or as a reward, while older buyers were attracted by technological innovation and owning the latest model.
- Although purchasing through an authorized dealer was the most popular option across all age groups, millennials and Gen Z were more likely to buy from digital platforms or through private sales. Significantly, the survey found a high degree of digital comfort among all generations, with three-quarters of respondents open to buying their next vehicle entirely online.
- The vast majority of buyers considered experiences to be a valuable part of their brand satisfaction. While driving-related or vehicle-related programs such as track events and factory tours came out on top, lifestyle-based events such as wine tastings or fashion shows were also popular, suggesting an emerging opportunity to develop the luxury automobile experience beyond the vehicle.
- Across all age groups, only about 10% of respondents said they owned a luxury or exotic electric vehicle (EV). And while nearly half of millennials and Gen Z respondents expressed an interest in purchasing an EV, the figure shrank to less than one-third for baby boomers and about 10% for the Silent Generation.
The report’s findings indicate that ecosystem players can’t rely on traditional approaches to captivate and capture an evolving customer base. To keep pace with the changes underway in the luxury and exotic automobile market, they should prioritize the following actions over the next few years: deliver regular, engaging online content that matches buyers’ growing digital sophistication; build emotional loyalty around brand; evolve e-retail models; double down on experiences; and create an emotional appeal around EVs.
The authors would like to thank Eric Jesse, Charles Bradley, Chirag Thaker, and Derek Jang for their contributions to this article.
