Americana

07.05.13

Young Americans Are Abandoning Car Ownership and Driving

Record numbers of young Americans don’t own a car or hold a driver’s license, and people are beginning to take notice.

Why do young people hate America so much?

Ari Fleischer, who served as press secretary for President George W. Bush, famously described the propensity of our countrymen to drive around in gas-guzzling vehicles part of the “blessed” American life.

But recent studies have shown a significant drop-off in the number of Americans, particularly young people, who engage in that most iconic American pursuit: owning and driving cars. So much so that The New York Times recently declared “The End of Car Culture.”

The numbers are stark. The percentage of 18-years-olds with a driver’s license plunged from 80 percent in 1983 to 61 percent by 2010. According to an analysis by Advisor Perspectives quoted in the piece, even the number of miles driven per person is below the historic peak by almost 9 percent.

The big question, of course, is why? The recession, and all it entailed—unemployment, stagnating wages, etc.—surely played a part. But, as the Times notes, a lot of these trends preceded the financial crisis.

One of those big, long-term shifts was the movement of large groups of young, college-educated adults back to major urban centers. The likelihood in general of individuals owning cars in urban areas is small. When you live in Brooklyn, a huge chunk of their resources are devoted to their rent. And in today’s gilded cities, parking spots have become luxury goods.

And over the past few decades, the car has become less vital to getting around in a city. Expanded light rail in cities like Phoenix, Salt Lake City, and Houston, more extensive (and newer) busing, as well as successful large-scale bike-sharing programs like Capital Bikeshare in Washington, D.C., Citibike in New York City, and Nice Ride in Minneapolis have allowed even more flexibility for urban residents.

Shifting trends in urban retail have also had an effect. Historically one might need a car to go grocery shopping or save money at a large retail chain. Recently however, big box retailers like Target, Costco, and Walmart are increasing their footprint in major cities, and major grocery stores (Safeway or Whole Foods for instance) can be found in most popular neighborhoods (excluding food deserts in poor neighborhoods).

Modern technology has made those decreasing moments where a car is necessary manageable with companies and programs like Zipcar, Uber, Lyft, and Car2Go. With these new businesses, you don’t need to own a car in order to gain the mobility that an automobile provides.

But perhaps one of the biggest reasons young people are not buying or driving cars at the historical rate is the high costs. Many millennials have graduated into poor labor markets bearing heavy debt loads. As a result for many, car ownership is a financial bridge too far. According to TrueCar, the average price of a car sold in 2012 was $30,500. And the cost of cheaper models is not exactly ripe for college grads burdened with record debt. The Ford Fiesta starts at $14,000, Toyota Corolla at $16,230, and the Honda Fit at $15,425. Despite commercials featuring rapping rodents, the price tag of $14,400 for a Kia Soul is still a hard sell. Not to mention that getting excited about a cheaper car is hard to imagine given that most models just are not terribly sexy and tend to blur into one another design-wise.

So what about used cars? Sure, the used-car purchase may not be terribly burdensome, but the costs associated with driving are not insignificant. Filling up continues to be painful—the average gasoline price is $3.47, according to AAA. Then throw in insurance costs, an excise tax depending on what state you live in, and increasingly expensive tolls.

The simple answer to the question of why the drop-off is that many young people just don’t need a car. The auto industry is the nation’s largest manufacturing sector and the nation’s largest retail sector. If it wants to continue to remain so, it will have to revamp its business model to serve young adults who haven’t picked up the habit of owning and driving cars.