According to the University of Michigan Transportation Research Institute almost 33% of teens have not bothered to get their drivers license. What bizzaro world do we live in? For most of us one of the seminal moments in our lives was the day we got our license but this new generation does not see it that way. The question is why? Economy, demographics, and culture all play a roll. Let’s dig a bit deeper into this after the jump.
My Dad told me not long ago that as the economy slugs along, fuel prices skyrocket, the war on emissions wage on, jobs are harder to come by, and good jobs become even more scarce the first thing to go will be cool cars. I’m not surprised he has this attitude being a young man in the 1970s when right before his eyes he saw the muscle car era come and go nearly over night. I thought he was just being a grouchy old man but the reality is, he’s probably right. This trend of the shrinking amount of car guys can be seen with the kids of today. They just do not love the car like we used to. Not to long ago 7 in 8 teens had their license but today it is two in three.
The change comes in a unique point in history where technology has made it much easier to communicate with your friends. It was not that long ago when to see your buddies you had to physically go to where they were. This probably meant in a car. However today with smart phones, facebook, twitter, and other social media it is very easy to stay in touch. It may be that the car is just not as necessarily any more.
That is surely part of the story, but it is not all of it. A lot of it is demographics. There has been a boom of urban growth in America for the first time since the early 20th century. People are now living in the city and moving from the suburbs. In the city there is less need of a car because of public transit and amenities being near by. This has also decreased the need for teens to own cars or drive.
The other and I feel larger part of the story is economics. Despite what you see on TV things are tough for a lot of people and cars are expensive. Families are in debt to their eyeballs, incomes have been cut, job security is non existent, and even part time work for teens can be very hard to find. This simply makes the price of a car, gas, and insurance unreachable for many teens.
If I may stretch this a bit farther and get up on my soap box I would also like to throw out the idea that there just is not much for a teen to get excited about. When my Dad was a teen owning a “cool” car was obtainable with basically any job. New muscle cars were cheap and used ones even cheaper, but think about today. Today a muscle car will cost you $30,000 for the V8 and entry level is in the mid 20s. Of course the finance industry is more then happy to saddle you with a huge loan for 5,6, or 7 years but maybe teens know what their parents do not, which is that a 7 year loan on a car is just stupid.
Maybe a teen has is eyes set on something a little smaller, maybe something Japanese or atleast an American compact. Well the entrance fee to that segment has quickly become $20,000 dollars and with insurance on those cars for a teen easily topping two grand a year or more that hardly seems doable too. So what is “cheap” in the new car category? How about a Chevy Sonic, or a Honda Fit? Well you will be sad to know that with just a few options it is actually pretty easy to bump that $20,000 figure as well.
So you have to ask yourself, if you are a kid today the dream car factor just is not obtainable. For example when I was a kid I loved the Dodge Viper which was about $62,000 and of course way out of my budget but in my budget was a nice used Camaro and tons of other cars. Now a short 15 years later that Viper is north of $120,000 and that lightly used Camaro? Well it will cost the same as a lot of new cars.
Of course used cars are the way to get good deals on cars and here at IG we always recommend shopping for a used car instead of paying the insane new car price. Used cars are great, they can be affordable and a great way to learn how to do basic car repair and maintenance. However with the used car market very inflated right now teens probably can not find that “dream car” used either.
All of this means bad news for the big automakers. No the teen market was never a big segment and usually the companies only marketed one car towards them but older people do buy cars. The baby boomers for example have been a huge boom for the automakers making up a large portion of their sales. What happens when this current generation of non drivers reach that age though? Well it seems downsizing and smaller profits seem in order for big auto unless they can get the kids interested in cars.