Author: Annette Malave, SVP/Insights, RAB
For some, purchasing a vehicle is exciting, for others it brings on a feeling of dread. There are many decisions to make; there are cost considerations. Vehicle purchase decisions by some are not just about the cost of the vehicle but the cost of vehicle ownership.
Along with financing, the cost of owning a vehicle can include the cost of fuel (whether it’s a gas-powered engine, a hybrid vehicle or an EV), maintenance and insurance. According to AAA, the average annual cost of vehicle ownership rose to $12.2K in 2023 compared to $10.7K in 2022. While vehicle price is one factor to cost, the next most significant is insurance.
Consumers today are taking price and insurance as purchase considerations. Eighty-four percent of adults 18 or older state that it is the overall cost that is important to them when purchasing a vehicle. Insurance cost trumps in-car technology for 63% of adults according to study released by Polly. In fact, 45% of respondents agreed that the price of auto insurance will impact future vehicle purchases. That percentage increases among younger survey respondents, millennials and Gen Z, to 51%.
Regardless of age, auto buyers are savvy insurance buyers. Nearly six in 10 adults researched auto insurance prior to purchase as did 53% of millennial and Gen Z respondents. They are also willing to switch insurance providers, mostly due to cost. A J.D. Power survey found that, during the first half of 2023, 12.5% of insurance customers were shopping for auto insurance. This coincides with the Polly survey results which found that 26% of respondents had been with their current insurance providers two to three years and the percentage was greater among millennials and Gen Z at 32%.
This is a challenge for auto insurance providers and their local agent, but there is an opportunity to influence and inform new clients, as well as maintain current ones. As both a local and national medium, auto insurance providers should tap into broadcast radio to drive messaging. With 81% of radio listeners currently holding a traditional auto insurance policy, it is a natural opportunity to target auto-buying intenders as well as current vehicle owners, per MRI-Simmons.
Radio listeners are motivated to select auto insurance providers because of rates (57%), customer service (45%), followed by company reputation (33%). These top three considerations are the same for millennials and Gen Z combined. Who do these groups purchase their insurance from? Local agents. Fifty percent of adult radio listeners and 42% of millennial and Gen Z cohorts, according to MRI-Simmons, get their auto insurance from local agents.
Purchasing a vehicle is an investment and with insurance as a consideration of the purchase, there is an opportunity for auto insurance providers to connect and engage with potential auto buyers. Using radio as part of the plan to connect with consumers during the auto purchase journey can provide the coverage auto insurance companies need to reach them.
This post was originally published on Radio Matters.