The increase of Hispanics populations flavor the growth of the automobile business

But not everyone can see it……

Written by Enrique Kogan

English translate by Marco Carvajal

Some people say that the super spicy pepper “Carolina Reaper” has the official Guinness record as the hottest chili pepper in the world.

People who have tried it say that its taste is deceptively sweet, but it is hard to remember that sweet taste as it proceeds to annihilate your palate. It’s like a molotov cocktail in your mouth, which helps you feel out of your mind.

And this is what is happening in the automotive market. Hispanic growth in car purchases is so great, that many of the anti-Hispanics in the automotive business are tasting their own “Carolina Reaper” by losing ground of the huge Hispanic market, because they didn’t invest and believed on this market.

I remember once when I asked Suzuki’s marketing manager, why he does not advertise in the Hispanic market?, he answered “If you want to buy a Suzuki, you will learn English “.

To make a story short, it seems that Suzuki’s executives did not want to advertise towards hispanics, and eventually Suzuki threw the towel in the country and lost this huge market.

And just like this “genius” of marketing, during my 35 years of experience in the American automotive market, I have met many other marketing executives , who I do not name because they are still there, and their tendency was the same, succumb to defeat, but with your own loss.

In spite of new immigration laws, every year more Hispanics move to live in the United States, and since this is a country where in most cities public transport is bad enough, all these new hispanic immigrants need to buy cars.

And because the purchase of a vehicle is a very important issue, many Hispanics prefer to purchase a car speaking in their own language, in Spanish, so for a dealer it is imperative to invite and welcome these consumers in Spanish, advertising and marketing in Spanish.

The average age of Hispanics in the country is 30 years, compared to 42 years for non-Hispanic Americans. That translates into 12 potential years of additional life in the purchase of cars, for the average Hispanic, what translates into more dollars for car dealers and car manufacturers.

21% of the automobile purchases made by Hispanics were for their first vehicle. So automotive brands are more likely to reach them first, of course, with advertisement campaigns target to Hispanics, made in Spanish.

Last year, US automakers only spent about 600 million in all kinds of Spanish media to advertise. This number is very, very far from the nearly 25 billion dollars advertising budget that the automotive industry pumps in the country, advertisement budget is not proportional to sales.

These numbers show that still today, marketing executives don’t want to invest into the Hispanic market and therefore are losing a huge potential in car sales.

Hispanics represent about 25% of the car purchasing market, but advertising budgets for Hispanics are less than 2.5%, it doesn’t make any sense!

Hispanic shoppers, like other consumers, buy what they value. This includes extended service agreements, insurance, prepaid maintenance, financing and leasing options.

High-income Hispanics are buying luxury cars at a faster pace than the general market, and those brands include from BMW, Audi, Land Rover, Mercedes Benz, Lexus and Infiniti, to the sports Ford Shelby Mustangs and Dodge SRT.

In cities like Miami, Houston, Los Angeles or New York, it’s normal to see Hispanics in Rolls Royce, Bentley, Ferraris and Lamborghinis, and other exotic models.

Many Car Dealers do not realize the national reach of Hispanic consumers

Twenty five percent of the populations in the main markets are Hispanic, and a good automotive marketing strategy must be targeted towards them.

Nissan knows how to do it, and recently helped some of its most successful retailers in Mexico to open dealerships in major cities in the United States, to improve the brand’s ties with Hispanic consumers.

The theory of Nissan’s Mexican dealers (The number one automotive in the Aztec country), is simple, make the buyer feel at home, and give you what you need to feel comfortable to buy your car.

The successful story of Nissan dealers in Mexico, is something that many should learn from, we will comment more in another note.

Hispanics prefer to speak Spanish when they buy something important like acar

According to Polk polls, many Hispanics need or prefer to speak Spanish when making important purchases and signing contracts.

Many have no connection with the advertising channels established by the automakers, such as main television networks. Young Hispanic people prefer they are stuck to their cell phones, the internet and social networks.

Many prefer Hispanic or Latino ties, even after several generations of US heritage, and look for products and services that specifically refer to their Hispanic identity.

Some challenge car dealers with a different approach to sales, for example, by bringing whole families to a showroom to negotiate the purchase of a vehicle.

Currently, 58 million Hispanics reside in the United States, 18% of the population, (not counting the illegal). And a significant increase is expected in the coming years. In Miami, Hispanics represent more than 50% of the population. In Houston, 40% and in Dallas is 34%.

The Hispanic population keeps growing, Hispanic people are known to have more children and keep their family ties what helps them to bring immigrant-relatives from other countries and to have more children, increasing Hispanic population faster.

Many studies say that in terms of initial car payments, Hispanics reach a dealership with US $ 4,833 cash average, versus $ 4,779 for non-Hispanics.

But average price of a vehicle purchased by a Hispanic is US $ 29,600 compared to US $ 31,900 for the total population. In addition, on average, Hispanics rent about 30% of their vehicles and buy a vehicle every 3.4 years.

The dealers who want to attract this market should hire bilingual staff and welcome them and treat them differently than other buyers, since studies say that Hispanic customers are very loyal to the dealers who respect them.

According to IHR consulting, the latest registration data for new vehicles by Hispanics shows that the growth in sales volume, year after year, has been greater for Hispanics than for non-Hispanics, and this trend continues to increase.

The Hispanic market grows but the budgets of some automotive companies doesn’t grow

The growth of the Hispanic market is outstripping the general market by almost 3 to 1 and there are many automotive companies that do not see this, and if they see it, they do it with their eye patched.

One example is General Motors, which was a market leader in the 1980’s, and today only has Chevrolet, and it keeps losing market every year.

Of course, if his budget of 3.5 billion dollars for the general market would be fair for the Hispanic market, then the result would be different, but Hispanics who represent almost 20% of the nation, only take around 1% of the General Motors budget. That way they will never be able to recover ground, and they will continue to lose this market.

Among automobile manufacturers, Honda reduced its expenses to the Hispanic market by 14.9% respectively, while Ford grew by 13.3%. Honda is in constant decline in the market. Their models are no longer as reliable for Hispanics as they once were.

If automakers are so serious about marketing toward the largest minority in the United States, why they don’t raise their budgets?

If Hispanics buy one out of every four cars sold in the United States (25% of sales), why advertising budgets do not match those numbers? I have asked that question many times and I have not had an answer. Hispanics buy 25% of the cars, but advertising budgets for hispanics are less than 2.5%

Kia and Hyundai are expected to report as a group for the future and take fourth overall, and reach the third by 2020, due to the fall of Honda.

Nissan Jeep, Hyundai and Kia have gone up somewhat in 2016. Dodge and Chevrolet have fallen.

These figures that I am giving, have only been updated until 2016 *

1-Toyota 16,90%

2-Nissan 12.60%

3-Honda 11.70%

4-Chevrolet 9,10%

5-Ford 8.50%

6-Kia 4,60%

7-Hyundai 4,50%

8-Dodge 3,70%

9-Jeep 3,50%

10-Volkswagen 2,50%

*Source: Polk de IHS Automotive

 

The Toyota Corolla continues to be the number 1 vehicle for the Hispanic market, but with the new trend of car taste changing towards SUV’s, both the Toyota RAV4 and the Nissan Rogue, which is already the best-selling SUV in the country, can change that trend.

The Hispanic market in the United States is key to the growth of new vehicle sales and will be critical to the success of the automotive industry in the next decade. If manufacturers do not see it that way, they will fall like the domino effect.

 

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Enrique Kogan comenzó su pasión por los autos a los 6 años de edad cuando su padre lo llevó a ver las carreras de autos en su ciudad natal, Buenos Aires, Argentina. Desde entonces no ha habido carrera de ninguna fórmula o país que no haya visto en la televisión o que haya asistido personalmente. A los 16 años comenzó a escribir sobre automóviles, y en 1982, ya en Miami, fundó su primera revista (Automundo) sobre la industria en los Estados Unidos. Vendió Automundo en 1992 y aún hoy se publica. Produjo exhibiciones automotrices (la exhibición de autos exóticos y deportivos más grande del mundo, con su primera llave de la ciudad). Produjo eventos de gran magnitud en el mundo del automóvil. Enrique Kogan posee 4 llaves de distintas ciudades, 6 proclamaciones de distintas ciudades, numerosas condecoraciones y premios, ademas de haber sido invitado a la Casa Blanca, durante la presidencia de Clinton. Organizó el festival argentino más grande del mundo y Rock en Miami, el festival de Rock latino más grande de los Estados Unidos. Editó varias publicaciones exitosas. Hoy escribe diariamente haciendo revisiones semanales de autos nuevos, en los medios hispanos más grandes de los Estados Unidos, mientras mantiene en lo mas alto, el sitio www.purosautos.com

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