With a new generation of car buyers entering the market, their expectations are shifting towards a very different buying experience than previous generations. Joining us on today’s episode of Inside Automotive is Tim Mullins, Chief Market Officer at Capital One, to share tips on how dealers can better connect with first–time car buyers.
For years, the auto industry has operated under the assumption that younger consumers want a fully digital buying experience, one where every step, from vehicle selection to financing, can happen without ever stepping foot inside a dealership. But new research from Capital One suggests the reality is more nuanced.
According to Capital One’s annual car buying outlook, 57% of Gen Z consumers indicate that they plan to purchase a vehicle within the next year, signaling that the generation is quickly becoming an important part of the automotive marketplace. For dealers, Mullins says this represents a new wave of consumers entering the buying process and understanding their expectations now will help retailers prepare for the future.
The car-buying myth
One of the biggest misconceptions about younger consumers is that they want a completely online vehicle purchase experience. But Mullins says Capital One’s research challenges that exact assumption. The research found that only 8% of Gen Z consumers said they want to complete the entire purchase process online, including having the vehicle delivered directly to their home. Mullins notes that the majority of buyers still see value in interacting with a dealership.
A large portion of Gen Z consumers prefer a hybrid experience, which completes research and routine tasks online while relying on dealership employees for guidance, confirmation, and reassurance. Mullins said, for dealers, digital retail is not replacing the showroom, instead it’s changing what customers expect when they arrive.
Additionally, while Gen Z may not want a completely digital purchase, their shopping journey very often begins online. Mullins explains that 81% of Gen Z consumers start their vehicle research journey on social media, making platforms like TikTok, Instagram, and other digital channels increasingly important tools for dealers. This shift, Mullins alludes, means that dealers need to think beyond traditional marketing.
Gen Z’s trust improves
Despite long-standing concerns about younger consumers’ trust in dealerships, Mullins says Capital One’s research uncovered a positive trend. In 2023, 44% of Gen Z consumers said they trusted dealers. By 2025, that number increased to 69%. Mullins attributes that improvement to changes dealers have made in creating a smoother buying experience, especially when it comes to connecting online research with the in-store experience.
Mullins believes that consumers no longer want to restart the process when they arrive at the dealership. They expect retailers to understand what they have already researched, what vehicles interest them, and what information they provided. The more seamless that transaction becomes, the more trust dealers can build.
Affordability is changing ownership
Beyond the shopping experience, Mullins says affordability is one of the biggest challenges facing first-time car buyers. With vehicle prices, insurance costs, financing rates, and ownership expenses all rising, Gen Z consumers are looking at the total cost of ownership differently than previous generations. Mullins also said that Capital One is seeing younger buyers consider factors such as:
- Monthly payment
- Insurance costs
- Fuel expenses
- Interest rates
- Long-term ownership costs
Rather than focusing only on the vehicle price, these consumers are evaluating the entire financial commitment. For dealers, Mullins said this means conversations may need to expand beyond the monthly payment and include more education around ownership expectations.
"We're starting to see Gen Z customers looking at the entire ecosystem of the payment. They're factoring in insurance, gas and interest. I've never heard a generation do that."
Moreover, one of the more surprising findings from Capital One’s research is that Gen Z still wants to communicate with real people.
While younger consumers are comfortable using digital tools, 55% said they prefer completing parts of the process online but still want the ability to speak with a human when they need help. Mullins says this is especially true when customers reach important decision points, including:
- Financing options
- Vehicle pricing
- Warranty questions
- Specific vehicle details
The lesson here for dealers, Mullins said, is that technology should enhance the customer experience, not remove the human element. He also believes that dealers don’t need to completely overhaul their operations for one generation of customers. Instead, they need to remain adaptable.
Ultimately, Gen Z buyers have different communication preferences, meaning dealerships need flexible processes that allow customers to engage through multiple channels, whether that’s texting, email, online tools, or phone conversations. The dealerships that succeed will be the ones that understand where customers want digital convenience and where they still value human expertise.
