||Automakers and Dealers Devoting More Resources to the Hispanic Market
Many automakers used to view Hispanic-oriented marketing as a way to drum up extra sales when their marketing budgets allowed. Often their efforts amounted to little more than dubbing Spanish over actors speaking English in TV commercials.
Today, they know not to overlook or underestimate what has become America's fastest growing minority group, a demographic now responsible for much of the nation's population growth and one that is expected to become the largest ethnic group in California next year.
U.S. auto sales to Hispanic consumers increased 27 percent last year, double the industry sales pace, according to registration data collected by R.L. Polk & Co. With industry growth slowing, Hispanics represent one of the biggest opportunities to gain share.
"If any (automaker) is not focusing on or putting their good-faith efforts toward Hispanic marketing, then I would have to question whether they're truly in the marketing business," Fred Diaz, head of Chrysler Group's Ram truck brand, told Automotive News.
Simply giving Hispanics lip service is not enough. To tap into this market, automakers have realized they need to create large-scale campaigns showing a deep understanding of Hispanic cultural nuances, while dealers sponsor local soccer organizations, seek bilingual employees and offer sales documents in Spanish.
Some dealers have tapped into a new program being expanded nationally this year called AutoAmigo, which promises a "hassle-free" vehicle-buying experience for Hispanics who might otherwise be hesitant because of language barriers or negative experiences.
Hispanics in the United States now number some 52 million, more than the population of Canada. Although 16.5 percent of U.S. inhabitants, Hispanics last year accounted for about 11 percent of new U.S. personal vehicle registrations, or about 1.2 million units. Polk projects their share to be almost 13 percent by 2016.
"If manufacturers are looking to invest in growth, they don't need to look any further than the Hispanic market," said Marc Bland, head of diversity and inclusion at Polk.
Hispanic buyers are especially important to the Detroit 3's future. They are concentrated in parts of the country where people buy many highly profitable pickups, such as Texas, and where domestic makes have performed poorly, such as California and several areas along the East Coast.
But Diaz, a fourth-generation Mexican-American, said Chrysler's attention to Hispanics was inconsistent in the past and virtually nonexistent when the company was just trying to stay alive during the recession. He insists Chrysler now sees Hispanic marketing as vitally important and intends to, if anything, spend more on it going forward.
"When you play to this market, you have to be very careful that you don't do things that appear condescending or appear that you're playing to the market," said Diaz, who considers himself 80 percent fluent in Spanish and also is CEO of Chrysler de Mexico. "You've got to stay committed to it, and you've got to do it right. There's a fine line between really resonating and really messing it up."
Ram recently began the second phase of a bilingual campaign launched in 2011 called "A Todo, Con Todo," The phrase literally means "To Everything, With Everything," but Diaz interprets it as "Give it everything you've got." Initial commercials featured two Hispanic men, nonactors Chrysler hired simply because they drove Rams, speaking extemporaneously in either Spanish or English about their trucks. The latest spots feature a hugely popular Colombian rock star known as Juanes.
Chrysler took a bold step to show its commitment to Hispanics when the Texas Rangers played in the 2011 World Series. It aired a Ram commercial but substituted the Spanish slogan at the end.
Ram sales to Hispanics increased 37 percent year-on-year in 2012 to 18,978, according to registration data from Polk, and the brand gained about a tenth of a point in share of the Hispanic market while pickups from Chevrolet and Ford lost share.
Ford Motor Co. went further than Chrysler during last year's NBA Finals, when it aired an entire commercial in Spanish with English subtitles. The 30-second spot for the Ford Escape crossover was seen by an audience that was, because the Miami Heat were playing, one-sixth Hispanic.
Ford also produced a Spanish-language version of the "Escape Routes" reality show it created in 2012 to promote the Escape, and it held two retail events last year connected to Hispanic fairs and festivals around Texas.
When shoppers visit a dealership, they often will find brochures, sales documents and other materials available in Spanish.
"We understand that much of the Hispanic population is bilingual, but there's a certain percentage of that that's more comfortable continuing to do business in Spanish," said Gloria Tostado, a spokeswoman for General Motors.
Japanese brands do best
Japanese brands have had the most success attracting Hispanic customers in recent years.
Toyota Division had the largest share of the Hispanic market in 2012, at 18 percent. Honda Division was second, with 13 percent. Both were up nearly a percentage point from a year earlier.
The Nissan brand was third, with 11 percent, followed by the Chevrolet and Ford brands, each with about 9 percent.
Gina Jorge, who leads multicultural marketing at Honda, said the company has been reaching out to Hispanic consumers for 25 years with the help of an agency dedicated to that purpose, Orci. Most major automakers now have dedicated Hispanic ad agencies.
"We like to think that we've earned their trust with that longevity," Jorge said. "We've earned the right to speak with them, to have dialogue."
At Paragon Honda and Paragon Acura in New York, 80 percent of the representatives who answer phone calls can speak Spanish. The dealerships film TV spots with personalities from Univision, a Spanish-language network that had higher ratings than NBC in the latest sweeps period.
These efforts have helped make Paragon one of the largest sellers of Hondas and Acuras in the country. Brian Benstock, the stores' general manager, pointed to last year's election results as evidence of how important it is to reach out to Hispanics. Republican candidate Mitt Romney beat President Obama by a 20-point margin among white voters, but a big reason for his loss was extremely low support from Hispanics.
"If we as marketers do that, if we make the same mistake that he made, we can lose a significant portion of our business," Benstock said. "They have a lot of buying power and they're extremely loyal. They find a dealer to do business with and they buy over and over with them."
Vehicle brands with the largest share of the Hispanic market in 2012, with increase from 2011 in parentheses:
Toyota, 18% (34%)
Honda, 13% (36%)
Nissan, 11% (21%)
Chevrolet, 9% (21%)
Ford, 9% (21%)
Hyundai, 5% (27%)
Kia, 5% (40%)
Dodge, 5% (41%)
VW, 3% (25%)
Jeep, 3% (39%)
Source: R.L. Polk & Co.
Dealers a big factor
Sara Hasson, Univision's senior vice president of strategy and insights, said dealers and individual salespeople play an especially large role in automakers' ability to attract and keep Hispanic customers.
"The Hispanic consumer is looking for a very different experience when they come into the showroom," Hasson said. "They approach it as much more of an event. They don't necessarily send out invitations, but they invite their extended family to join them when they go shopping."
And more often than the average shopper, a Hispanic consumer leaves the showroom with a bad taste in his or her mouth.
"Hispanics are much more likely to say they had a poor experience with the dealer or the salesperson," said Arianne Walker, senior director of automotive media and marketing solutions at J.D. Power and Associates. In many cases, the problem could be a language barrier, but it also could result from the shoppers feeling unwelcome or intimidated.
One mistake automakers and dealers must avoid is viewing all Hispanics as part of one homogeneous demographic. The Hispanic population in California is mostly people of Mexican descent, while Florida has many Cubans, and Puerto Ricans are numerous in New York. Cultures and preferences differ among those groups as well as between first-generation immigrants who primarily speak Spanish and U.S.-born Hispanics who are fluent in English but often still use Spanish at home.
The U.S. Census Bureau defines Hispanics (and "Latinos," which it uses interchangeably) as people who trace their origins to Mexico, Puerto Rico, Cuba, Spanish-speaking Latin American countries and other Spanish cultures, regardless of race.
Shaun Del Grande, president of the Del Grande Dealer Group, which has 11 stores in the San Francisco Bay area, said that in general, marketing to Hispanics is very cost-effective because "there's not 101 channels" dedicated to that audience. But the key, he said, is backing up the pitch by taking good care of the shoppers it brings in.
"We want to provide this group of people a wonderful experience, a transparent experience, a trustworthy experience and build a relationship," said Del Grande, who is bilingual and voices Spanish radio commercials with a Univision personality known as El Zorro. "If you're going to invite them in -- if you say, 'Se habla español' -- you'd better be able to meet their needs."
AutoAmigo, which connects shoppers with vetted local dealers in the vein of TrueCar.com and Edmunds.com, aims to overcome the hurdles that can hinder sales to Hispanic customers. The program is created by GroupCars, an online buying service, and Univision, which reaches more than 90 percent of U.S. Hispanic households and therefore can effectively help dealers advertise to potential customers.
It has been running a pilot program in South Florida and began a nationwide rollout last week. Sean Wolfington, AutoAmigo's chairman, said it plans to be in all major cities by year end.
Brands with the biggest share of 2012 U.S. sales going to Hispanic buyers:
Source: R.L. Polk & Co.
'Very easy to close'
Shoppers select a vehicle and get preapproved for financing before AutoAmigo schedules an appointment with a dealership that has trained, Spanish-speaking staff. Customers can use a smartphone app to scan vehicles' window stickers and learn the average price paid and the price that dealer has set for AutoAmigo customers. The dealer pays $300 each time a transaction brokered by the program closes, which happens between 50 percent and 75 percent of the time, Wolfington said.
"It's not a lead; it's much further down the funnel," Wolfington said. "Customers like it because they can have confidence that they're not going to be taken advantage of, and dealers like it because they can get preapproved appointments for free."
Richard Bustillo, general manager of Rick Case Honda in Davie, Fla., said his store's initial experiences as one of about 50 in AutoAmigo's pilot have shown it to be worthwhile.
"We're not getting a lot of leads, but the leads that we're getting, because of their process, they're very easy to close," said Bustillo, who already devotes at least a quarter of his marketing budget to Hispanics. "This is going to be the Hispanic version of TrueCar, only a little bit easier for the consumer when they get into the dealer. And once they get into our family, then they just keep coming back."
Ethnic groups' shares of new U.S. personal vehicle registrations in 2012, with increase from 2011 in parentheses:
Hispanic, 11% (27%)
Black, 7% (17%)
Asian, 5% (23%)
Source: R.L. Polk & Co.
(Source: Automotive News, 03/18/13)