We can’t see the future…if we could, we would be winning the lottery this week…but we can look at new data that’s emerging and make conclusions about the future of the auto industry. So what does the future hold? New research shows that young people are driving less and placing a reduced amount of emphasis on car ownership, a trend they are likely to pass down to their eventual children. Could this be the beginning of a slow death for the automobile industry?
According to research done by the Frontier Group, the share of 14 to 34 year olds without a driver’s license was 21 percent in 2000 and has increased to 26 percent in 2010 with the trend continuing to this very day. So what is causing this decline in young drivers? One could point to a change in emphasis for what’s important in the life of young adults.
Today, 14 to 34 year olds are investing in technology like smartphones, computers and other tech-related gadgets and passing on spending their money at the car lot. While this plays a role in the overall issue, we’re not sure this is the main driver. Another problem facing young people today is The Great Recession. It’s no mystery that today it’s harder for high school and recent college graduates to find good-paying jobs. Certainly being unemployed or underemployed has exacerbated this trend, however we still don’t believe this is the root of the problem.
What we believe to be the main catalyst in the decrease of young drivers is the shift to urban living. Big cities offer public transportation, increased walkability and the chance to cycle everywhere. These urban centers place less of an emphasis on vehicle ownership and stress using public transit, carpooling and green living.
If you take a step back and look at the big picture, the reason for this declining trend is most likely a combination of all three. Young adults are looking for job opportunities so they move to urban centers and then invest in technology to help increase their potential of being hired.
So could we one day see the automobile become extinct? Possibly, although probably not in the near future and with so many different economic issues behind this declining trend, it’s easy to see a swing in the right direction for job growth, country living or other factors totally reversing what we are witnessing today.