Cross-brand partnerships and collaborations have been the marketing tool du jour for more than a decade, but automakers have been a little slow to get into the game. Over the last few years, companies like Ford (F), Dodge and Volvo have partnered with seemingly unrelated consumer companies in an effort to attract new customers and solidify existing ones, and it’s changing the way that young people consider their first vehicles.
“Gen Z has become the most important consumer base,” Parija Kavilanz, a veteran retail reporter and co-founder of the retail news site Bagable.com, told Observer. “Everyone, across industries, they’re thinking of ways to attract the consumer base, and keep them locked into their brand. Gen Z make up between 20 to 25 percent of the overall consumer market, and they’re growing.”
Retailers and automakers alike have taken notice of that growth, too. Nielsen IQ recently released a study showing that Gen Z’s purchasing power is expected to grow to a whopping $12 trillion by 2030, making them the wealthiest generation yet. Their spending is expected to surpass that of baby boomers’ by 2030, the study shows.
Meanwhile, for years, headlines claimed that Gen Z are less interested than their previous generations in owning personal vehicles. However, that began to shift over the last few years as they grow older. The group is still deeply focused on technology when it comes to cars, thanks in large part due to the rise and popularity of Tesla with its single-screen infotainment and quirky features such as its childish fart sounds, but they are also increasingly heading to the dealership to buy their first vehicles.
While Gen Z still don’t drive much and show signs of getting bored with electric vehicles, they still represent a large market for automakers, who are trying to get their attention with unconventional products, such as a retro-style automotive t-shirt from Abercrombie or a lush candle made by the perfumer D.S. & Durga in partnership with Volvo.
Lifestyle partnerships are a meaningful revenue stream for carmakers
Collabs and partnerships aren’t new, but they are uniquely Gen Z. “I was reporting on these really weird, bizarre partnerships going all the way back to 2016,” said Kavilanz, who was a retail reporter for CNN Business for nearly 15 years. “These unconventional groupings started to pick a pace at the same time when Gen Z was maturing, and sort of starting to dictate the way brands would develop their marketing strategies because [Gen Z] are such heavy social media users. But they’re also fickle, because they’re young, they want something new, something different.”
It turns out that expanding a car brand into, say, perfume like Mercedes-Benz has, is a big business, too. Licensing deals, collaborations, and partnerships where automakers partner with another company to release special t-shirts, small-scale vehicle models, soap and even special boots reportedly pull in billions of dollars each year for automakers. While most carmakers don’t break out how much they make on merchandising, it’s become a meaningful revenue stream for them.
It’s not just overalls born out of a partnership between Ford and Sydney Sweeney or kids’ cars made by Jeeps, either. High-end automakers are investing in luxury homes all over the world as “brand extensions” of their core products.
For example, there’s the Porsche Design Tower in Miami, which was completed in 2016 and allows residents to take their Porsches up to their apartments using a special elevator, called the “Dezervator,” and park them inside their homes. Similarly, Bentley (which is owned by VW Group, just like Porsche) is currently building a luxury apartment complex in Miami equipped with four Dezervators. Bentley has also partnered with Luxury Living Group, an European luxury furniture maker, to create an entire line of home furniture for those who want a full brand experience.
“For a lot of these brands that have been around forever, it’s important to attract new customers,” Kavilanz said, noting that creative collaborations is also a crowded market. “You really have to find ways to stand out. A lot of the trend about these unconventional partnerships is about breaking through that clutter and making sure that you’re able to keep [young consumers] interested and excited,” he said.
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