With the economy still suffering and gas prices only slightly recovering, auto sales continue to slump in the recent market. But a study by R.L. Polk & Company, as reported by Automotive News, suggests that sales to "ethnic" consumers have been consistently strong, and growth in their population contains much potential for growth in the auto industry.
Recent trends identified in the U.S. census show growing levels of income for many ethnic groups, which translates into more disposable income ripe for the auto industry. Though overall new vehicle registrations were down 3.3% in 2007, Hispanic, Asian and African-American consumers maintained 22% of the market.
"Multicultural markets have been showing growth over the past few years in an automotive market that has been in decline," said Mark Pauze, senior solutions consultant at R. L. Polk & Co.
Many indicators point to this market growing, especially that of ethnic population growth. According to the U.S. census data from 2007, Hispanics, African-Americans and Asian-Americans are expected to make up over 33% of the American population by 2010, and by 37% by 2020. The Polk study suggests that marketing towards these groups could benefit leading auto manufacturers.
SEMA research suggests that marketing specialty equipment towards this demographic could be beneficial as well. According to SEMA’s Automotive Lifestyle Study, enthusiasts that classified themselves as ethnic minorities spent around 10% more on specialty equipment in 2007 compared to those that classified themselves as “white.”
Although the number of Hispanic, Asian and African-American enthusiasts that took the survey was small—only 18% of the survey respondents classified themselves as one of the ethnic minority groups—this market is likely to grow in the future, yielding potential profits.
For more SEMA market research, please visit www.sema.org/research.
-"Study: Ethnic Market Offers Opportunity," Mary Connelly, Automotive News, 8/11/08