Solera APAC managing director Chris Iacovou says the demand for environmentally conscious solutions is gaining momentum across various sectors, and the automotive industry is no exception.
A new generation of consumers essentially drives this rising tide of sustainability awareness: Generation Z. Making up approximately 20% of the Australian population, Gen Z are increasingly taking the wheel and therefore, the industry must be ready to engage with this new generation of environmentally conscious consumers.
By listening to the evolving preferences of this influential generation, automotive leaders can pave the way for a future fuelled by economic growth and environmental responsibility.
The drive for sustainable options
Drivers across the world are looking for more sustainable motoring options. The surge in electric vehicle (EV) sales is an obvious example of this demand. Figures from the Electric Vehicle Council show interest in electric vehicles has grown significantly in the past 12 months, accounting for 8.4% of all new cars sold in the first half of 2023 – an increase of more than 120% compared to all of 2022.
This is also helped by a higher level of social understanding around the environmental impact of internal-combustion-engine (ICE) vehicles than ever before, with plenty of buyers willing to make a choice that aligns with their values and morals.
As well as greener vehicle models, motorists increasingly favour more ignorant insurance policies. Four-fifths of 17-24-year-old Australians (82%) told us they would stick with or switch to an insurer that can prove its sustainability credentials.
There’s an opportunity for automotive insurers to offer greener propositions. For example, insurers should consider offering competitive premiums for policies prioritising repairs and green parts. They’ll need to work with garages and body shops to make that possible – and to help upskill them to take on more complex repairs.
Embracing a used part of the revolution
The fashion industry has done an exemplary job of redefining the perception of ‘used’ clothing as ‘pre-loved’. This shift has benefited the environment and resonated with eco-friendly consumers seeking quality without compromising on their values.
The same revolution must happen in the automotive industry if it wants to continue to attract the environmentally conscious Gen Z.
The encouraging news for the automotive industry is that the foundations for this revolution among Gen Zs already exist. Solera’s research shows 76% of 17-24-year-old Australians are ready to embrace pre-loved automotive parts, compared to 59% for all other age groups.
For those who wouldn’t be comfortable, the top cited reasons are reliability (66%), longevity (61%) and safety (58%) concerns. Despite the pendulum starting to swing, there’s a lingering stigma with ‘used’ car parts connoting ‘inferior’. But used doesn’t equate to scrap, nor do they compromise safety. They can be more efficient, sustainable, and cost-effective, doing the job as effectively as new parts.
To tackle this misconception, insurers, body shops, and garages are responsible for educating their customers. Garages should take note. By embracing sustainable changes, offering green parts as an alternative and catering to the needs of Gen Z, garages will gain a competitive advantage and enjoy repeat business.
Sustainability through the whole vehicle lifecycle
In any industry, moving to more sustainable operations is complex. To bring about real change, sustainability goals must be factored into every stage of a vehicle’s lifecycle, from birth to death.
Data – and the insights it generates – is the linchpin of a sustainable automotive industry and one of the biggest obstacles for businesses moving forward with sustainability efforts. For example, by using data and AI to assess vehicle damage remotely rather than driving to a body shop, technicians can diagnose and repair vehicles more quickly and without incurring emissions from going back and forth to the shop for assessments.
As more drivers seek sustainable options, providing services that align with eco-friendly preferences will attract more customers. The automotive industry must acknowledge that Gen Z isn’t just demanding change; they’re actively shaping the future.
Insurers, businesses, and body shops can’t afford to be stuck in neutral. Collectively, we must recognise this shift in consumer behaviour and adapt accordingly.
About Solera:
Solera is a global leader in vehicle lifecycle management software-as-a-service, data, and services. Through four lines of business – vehicle claims, vehicle repairs, vehicle solutions, and fleet solutions – Solera empowers its customers to succeed in the digital age by providing them with a “one-stop shop” solution that streamlines operations, offers data-driven analytics and enhances customer engagement.
