Gen Z Drives the Automotive Industry Towards a Sustainable Future

By Dr Rana Farag, PhD, MBA, AI Product Leader

The demand for environmentally conscious solutions is gaining momentum across various sectors, and the automotive industry is no exception.

This rising tide of sustainability awareness is largely driven by a new generation of consumers: Generation Z. Studies indicate that 82% of Gen Z individuals express concern about the future of the planet and 76% are actively changing their behaviours to lessen their environmental impact.

While Gen Z currently constitutes a small segment of the automotive market, making up 26% of the global population, as more of them become driving age, their influence will grow.

This is a pivotal moment for the automotive industry. As Gen Z increasingly takes to the wheel, the industry must be ready to engage with this new generation of environmentally conscious consumers and explore new means of reducing the environmental impact of the automotive industry. By listening to the evolving preferences of this influential generation, automotive leaders can pave the way for a future fuelled by both economic growth and environmental responsibility.

A used part revolution

In recent years, the fashion industry has undergone a huge shift, redefining the perception of ‘used’ clothing as ‘pre-loved’ and championing sustainability. This shift has not only benefited the environment but also 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. To do this, the perception of used-car parts need to change.

To tackle this misconception, insurers, body shops and garages have a responsibility to educate their customers. There’s a lingering stigma about using car parts, with consumers often associating “used” with inferior quality. But pre-owned car parts don’t equate to scrap; they don’t compromise safety. They can be more efficient, sustainable and cost-effective, whilst doing the job just as effectively as new parts.

This transition to used car parts isn’t just another example of greenwashing either – it could be transformative for the industry. A report from Allianz, Risk reports mirror outcomes of Allianz Motor Day: more green initiatives needed to solve climate change this research indicates that a mere 2% rise in repair rates across Europe could slash annual CO2 emissions by 30,000 tons.

The encouraging news for the automotive industry is the foundations for this revolution amongst the Gen Zs already exist. Solera’s research shows that 80% of 17-24-year-olds are ready to embrace pre-loved automotive parts, as long as there is a guarantee attached to them, compared to 58% for all other age groups.

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 amongst this group. As more drivers seek sustainable options, providing services that align with eco-friendly preferences will attract more customers. 

Busting the price myths

There’s a misconception that green choices tend to be the more expensive ones. Research shows that Gen Z is more price conscious than previous generations when purchasing and repairing vehicles, meaning they could be put off thinking about making greener choices.

However, the reality is used car parts may not only be more efficient and sustainable – they are also more cost-effective. In fact, research has found opting to repair rather than replace in instances where it is safe and plausible could save consumers almost £3,000 a year.  Garages could also save money on repairs instead of purchasing expensive new parts, meaning it’s a win-win for all.

A new type of sustainable insurance

It’s not just used parts that can make the automotive industry more sustainable. The insurance industry can work with garages and body shops to make insurance premiums greener to attract a new generation of drivers to green insurance policies instead of going for the default.

A range of tools now exists for insurers that provides valuable data insights on their carbon footprint and offer reduction initiatives to reduce them. This allows insurers to compare the CO2 emissions associated with repairing car parts versus replacing them, enabling them to work with garages to make well-informed decisions on the work a car needs.

AI will be key to driving profit and sustainability

The key to making the entire lifecycle in the automotive industry more sustainable is by implementing technology. AI is key to this, streamlining the entire claims process and making it easier than ever to suggest the greenest repairs solution for insurers, garages and body shops.  

The automotive industry must acknowledge that Gen Z isn’t just demanding change; they’re actively shaping the future. So, insurers, businesses and body shops can’t afford to be stuck in neutral, they must recognise this shift in consumer behaviour and adapt their practices accordingly.