Rules of the road: Equitably serving Black automotive consumers – McKinsey

August 3, 2022 by No Comments

Cars have long represented status, freedom of movement, and—at various times in the United States—an expression or assertion of full citizenship. For Black Americans, the symbolism is sharp: cars have historically functioned as a means of escape from severe segregation. For many Black Americans, cars are still a form of self-expression, especially when customization is part of the conversation.

In the aftermath of the COVID-19 pandemic, our research shows that many Black Americans will spend more on private vehicles, with many looking to purchase electric cars. McKinsey analysis suggests that Black consumer spending on automotive products will reach $190 billion by 2030.

Companies in the automotive industry have an opportunity to earn the attention and loyalty of Black consumers: McKinsey research conducted after the onset of the COVID-19 pandemic found that Black consumers are more likely than non-Black consumers to want to reduce their use of public transit and ride-hailing. This pattern makes car ownership especially important. Thirty-five percent of Black survey respondents said they are not loyal to a particular auto brand, and our analysis suggests that up to $14 billion (15 percent) of Black consumer spending in the sector will be up for grabs. The number could grow to $25 billion in 2030 (in nominal dollars). However, the relationship between Black consumers and the automotive industry can be fraught, especially when financing is involved.

The question is how companies in the automobile value chain—manufacturers, dealerships, and automotive aftermarket companies—can serve Black consumers better and more fairly. Our research suggests that equitable financing, omnichannel experiences supported by plentiful information, and investments in electric-vehicle (EV) charging networks (in light of surging demand for EVs

) are the most important places to start. These actions not only are more equitable but also could increase the loyalty—and spending—of Black consumers.

Our research suggests that equitable financing, omnichannel experiences supported by plentiful information, and investments in electric-vehicle (EV) charging networks are the most important places to start.

Needs and preferences that drive spending on autos

Our research found that when Black consumers shop for vehicles, auto parts, and repair services, they place outsize emphasis on affordability and value for money, information and recommendations, and product reliability compared with their non-Black counterparts (Exhibit 1).

Exhibit 1

We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: [email protected]

First, consider affordability and value for money. It is the most frequently cited reason among the 57 percent of Black consumers who prefer to buy used cars when shopping for an automobile. (For reference, 47 percent of non-Black consumers prefer a used car.) Ninety percent of Black respondents (compared with 78 percent of non-Black respondents) also listed “the best financing terms” as one of their top three considerations in choosing a new-car dealership. Affordability—particularly the search for the best deal—may also explain why more Black consumers than non-Black consumers (44 percent versus 33 percent) said they like to buy auto parts online. The same outsize preference for digital channels (compared to non-Black consumers) is observed with used cars.

The focus on affordability may be linked to the persistent racial wealth and income gap. In …….

Source: https://www.mckinsey.com/featured-insights/diversity-and-inclusion/rules-of-the-road-equitably-serving-black-automotive-consumers

Tags:

Leave a Comment

Your email address will not be published. Required fields are marked *