No Car, No Problem

I bet most of you did not think twice about getting your driver’s license when you turned sixteen. No doubt some of you even applied on your sixteenth birthday! Research published by University of Michigan’s Transportation Research Institute, that studied the proportion of people with driver’s licenses over the years, showed that in 1983 about 46% of 16-year-olds had a driver’s license. By 2014, this number had dropped to 24.5%. Automobile companies will have to adapt to this ebbing tide. 

Generation Z refers to the demographic cohort born between 1995 and 2015. They are a generation that is not only quick to use services like Uber and Lyft, but don’t shy away from public transportation. These young people are also choosing lifestyles and activities that require less time in cars. 

Perhaps one of the less positive reasons for reduced teen driving is that they simply do not have the same need to see people face to face. With the huge growth of social media, teens are happy to hang out virtually. Researchers found that the percentage of young drivers is inversely related to the proportion of internet users.

Teen employment has also been on the decline since the 1980s. This trend was exacerbated during the 2008 recession when, to make ends meet, some older adults took part-time jobs that once would have been filled primarily by teens. Higher unemployment rates among teens mean there is no need for a driver’s license to drive to work. Moreover, teens are less able to subsidize the costs of car ownership.

Teens also report that another major factor behind not obtaining a driver’s license is the lack of time. Today’s teens might have to manage eighteen-hour days between school, athletics, clubs, volunteering, youth groups, and all the classes they’re trying to master with colleges becoming more and more competitive. So, it’s no surprise that just trying to keep all those balls in the air means that driving gets dropped. It’s far easier to get all that studying done from the backseat.

Teens are not the only ones going carless. Four of our employees in the office get to work by foot, bike, or public transportation. University of Michigan’s Brandon Schoettle says, “there’s just been a shift publicly for people to move to things like public transportation that just wasn’t there back in the ’80s and ’90s, partly because there’s sometimes better public transportation in certain areas than there was a few decades ago, and a little more concern about the environment,”.

These demographic changes are creating challenges for the car industry. To make things worse used car purchases are on the rise driven by the apparent cost consciousness of Generation Z. 63% the cars bought by this demographic in 2018 were used.  That compares with 41% for Baby Boomers. Car companies will have their hands full in the coming years trying to overcome these predicaments, as if the advent of self-driving cars was not already enough for them to worry about.

Dan Hall