Generation Z, born between the mid-1990s and the early 2010s, has been characterized as a generation that is tech-savvy, environmentally conscious, and more interested in experiences than possessions. As such, it should come as no surprise that they are showing a lack of interest in owning a car and driving. While it is important for automotive suppliers and manufacturers to be aware of this trend and make adequate product and marketing adjustments to Gen Zers, a deeper dive into the data provides an unexpected plot turn that should not be missed. Gen Z's disinterest in cars might be short-lived, and their long-term purchasing preferences may be similar to those of the baby boomer and millennial generation, albeit with a later start.
The Data At A Glance
Turning 16 and obtaining a driver's license used to be a long-awaited milestone for teenagers across the U.S., but times have changed. According to a data analysis performed by the Insurance Information Institute, 43% of 16-year-olds had driver's licenses in 1997, by 2020, that number had fallen to 25%. This trend seems to also hold true even for older members of Gen Z, only 80% of Gen Zers between the ages of 20 to 25-year-olds had licenses in 2020, whereas 90% of the same age group had their licenses in 1997. The reasons for this trend are multifaceted, but studies show it can be attributed to several factors.
One reason for Gen Z's lack of interest in cars and driving is the rise of ride-sharing services and other trending modes of public transportation such as electric scooters and bikes. These services provide a convenient and affordable alternative to owning and maintaining a car, especially for those living in urban areas or on college campuses where the modes of transportation are readily accessible. With a touch of a button, they can summon a ride from their smartphone and be on their way.
Another reason for Gen Z's apparent lack of interest in cars is they identify as being more environmentally conscious of their carbon footprint compared to earlier generations and want to prevent the negative impacts that driving traditional automobiles can have on the environment. Additional reasons include the high cost of owning and maintaining a car, in part due to ongoing supply chain disruptions and increased insurance costs. The cost of car ownership and upkeep is particularly problematic for Gen Zers who are burdened with student loan debt from obtaining higher education and entering the job market at a later stage than earlier generations. Further, Gen Z reports a heightened fear around driving compared to earlier generations and less need for personal transportation on a daily basis given the increase of remote work.
Gen Z's Anti-Car Culture May Be Short-Lived
While it is difficult to predict with certainty how car sales will be impacted by Gen Z's lack of interest in cars and driving, a deeper dive into Gen Z's current lifestyle choices and feelings towards driving shows their ambivalence towards cars may be short-lived. For example, as Gen Z grows up, moves away from city centers and college campuses, and has children, their need for day-to-day private transportation will likely increase. Additionally, while ride-sharing services are popular for this age group, they may not be as cost-effective in the long term as owning a car, especially for individuals who travel frequently and need to commute long distances. Moreover, as electric and hybrid vehicles become more affordable and accessible, they may become an appealing option to the environmentally conscious Gen Z. Further, developments in autonomous driving technology and enhanced safety features may alleviate some of the anxiety associated with driving that Gen Z currently reports.
Automotive suppliers and manufacturers should continue to develop innovative solutions and adapt to the changing landscape, but all hope is not lost. Efforts towards producing more environmentally friendly and cost-effective vehicles will likely address the primary concerns of Gen Z, particularly once they reach key life milestones that render life without a car far more impractical, such as moving to the suburbs and having kids.
Therefore, despite their current disinterest in cars and driving, Gen Z may still have a desire for car ownership as they age and their lifestyle change. This pattern of early disinterest in cars later followed by historically consistent purchasing is actually not novel.
Unprecedented findings or Deja' Vu?
A trip back to when Millennials began reaching driving age is instructive. A decade ago it appears that Millennials were similarly disinterested in owning a car in comparison to earlier generations, like the boomers. For example, the number of young Americans driving in 2014 significantly declined from earlier generations and the prevalent narrative was that Millennials rejected cars. However, as Millennials grew up, it turned out that their attitudes toward car culture were not so different from the boomer generation. It was not but a few years later, as Millennials aged, began to establish their careers, and were able to finally afford cars with their raising incomes that a larger percentage began purchasing cars just like their parents had. Indeed, CityLab reported in 2019 that based on a national study there is not much difference in Millennials' desire to own a car compared to previous generations.
Bottom Line
Gen Z's early lack of interest in cars and driving may impact future car sales, but the magnitude of this impact will likely be less than feared. Automotive suppliers and manufacturers should remain adaptable and innovative to meet the changing needs and preferences of consumers. Gen Z has shown a lower interest in cars and driving compared to previous generations, but there is evidence to suggest that they are just as likely to buy a car in the long term.
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