Why young people aren’t driving
At regular intervals, the New York Times adopts the tone of an agitated retiree looking out their window hoping to see children playing so that they can yell at them, only to disappointedly mutter something incomprehensible about social networking when they realize no one is, in fact, on their lawn.
The latest example was last Thursday’s piece by Amy Chozick explaining why young consumers are not buying that many cars:
That is a major shift from the days when the car stood at the center of youth culture and wheels served as the ultimate gateway to freedom and independence. Young drivers proudly parked Impalas at a drive-in movie theater, lusted over cherry red Camaros as the ultimate sign of rebellion or saved up for a Volkswagen Beetle on which to splash bumper stickers and peace signs. Today Facebook, Twitter and text messaging allow teenagers and 20-somethings to connect without wheels. High gas prices and environmental concerns don’t help matters.
Despite identifying two real downsides of car ownership, Chozick instead focuses on the vague idea that it’s young consumers’ attitudes and relationship with technology that push them away from cars. Car culture no longer exists because it has been displaced by technology culture.
The problem is that the waning intensity of car culture among the young, is an effect, not a cause. The economic conditions of car ownership in the 50′s, 60′s and 70′s were far more favorable than they are today. These economic conditions created the widespread and diverse car cultures Chozick eulogizes. As those economic conditions lapsed and car ownership became far more economically burdensome, it should not be surprising that car culture faded in response.
Why has owning a car required a greater and greater share of individual income over the past decades? Four significant trends have each played a role.
1) Car prices have risen and are at all time highs, up 11% in just the last four years.
2) Gas prices have also risen in real dollars, as illustrated by the below chart from this Washington Post piece on the topic:
3) These increases in gas prices have not been offset by efficiency gains. MPG has largely stagnated since the late 1970′s and early 1980′s, as documented by the EPA:
4) The income used to purchase these increasingly expensive cars that consume roughly the same amount of ever more expensive gas has essentially flatlined:
These four trends combine to make car ownership more expensive both initially and over the life of the purchase now than it has been in the past. And Chozick’s own data cited backs this up:
In 2008, 46.3 percent of potential drivers 19 years old and younger had drivers’ licenses, compared with 64.4 percent in 1998, according to the Federal Highway Administration, and drivers ages 21 to 30 drove 12 percent fewer miles in 2009 than they did in 1995.
With the cost of driving on the rise, fewer young people are getting driver’s licenses and those who do are driving less to keep gas and maintenance costs at a minimum.
Instead of looking at why young consumers aren’t buying more cars, we should be asking car makers why they deliver so little value to consumers.