Young people simply aren’t buying - or even wanting - cars like they used to. For the motor industry, that’s a cause of great concern
18 September 2013

Possibly the greatest cinematic celebration of cars and youth, American Graffiti, celebrates its 40th anniversary this month.

The story of California teenagers’ lives revolving around their cars rang true once but would seem hopelessly contrived if made today. Nowadays, increasing numbers of teenagers across the developed world don’t even bother getting a driving licence, let alone a car. 

Car manufacturers are starting to fret that young people - the car buyers of tomorrow - are falling out of love with their products. Given the ageing populations of developed countries, car companies are desperate to woo as many young buyers as possible, and the thought that the crucial youth market might dry up is giving bosses sleepless nights. 

To see how bad things could get, just look at Japan, where the pheno menon was first noted. A stagnant economy for the past 20 years, serious congestion and a youth market focused on products with plugs, not petrol, has led to a collapse in the Japanese car market. It peaked in 1990 at 7.7 million, and then fell steadily to a low of 4.2 million in 2011, before recovering slightly to 5.0 million in 2012 (mainly because of government incentives).

However, the true picture is even worse. The proportion taken by mini cars up to 660cc has soared to 40 per cent of total sales - and they are the least profitable (and least aspirational) part of the market.

A survey of 1700 Japanese in their 20s and 30s by Nihon Shimbun, Japan’s biggest business newspaper, found that the proportion of Japanese men in their 20s who wanted a car fell from 48 per cent in 2000 to 25 per cent in 2007, and the proportion of Japanese drivers under 30 halved between 1993 and 2005.

One of the key factors identified in Japanese surveys was the rise of the internet. Young people can socialise and shop online so have less need to leave the house. 

That may sound far-fetched, but a 2011 study by the University of Michigan Transportation Research Institute, which was part-funded by an anxious motor industry, found that this is a worldwide phenomenon. 

Looking at 15 countries, the study found that there is a statistically significant correlation between the rise of the internet and the decline in the number of young drivers. 

The fact that the decline has more to do with attitudes than economics is borne out by Germany, where recessions are what happen to other people. Despite being the centre of the European motor industry, the number of people under 25 holding a licence has also fallen significantly over the past 10 years.

Meanwhile, in the UK, Department for Transport figures show that the proportion of 17 to 20-year-olds with driving licences peaked at 48 per cent in 1993 and fell steadily to 31 per cent by 2011, and for 21 to 29-year-olds the proportion fell from 75 per cent to 63 per cent over the same period. 

The later that people enter the car market, the fewer cars they will buy. Especially in big cities, they might decide never to buy a car. The rise of car clubs points to the growing popularity of ‘usage, not ownership’; increasing numbers of people want access to a car but not the hassle of owning one.

Forty years ago, the car was seen as the passport to freedom and a way of showing off to one’s friends. Indeed, schemes like our own Autocar Start are attempting to invoke that same sentiment, by giving learner drivers the right training and so improving driving standards.

In terms of what we would now call ‘consumer electronics’, though, the cars of yesteryear offered radios as an optional extra (along with the single speaker that came with it).

Today, it’s the consumer electronics that increasingly interest the youth market and, to some, the car is just a necessary tool for transporting the gadgets that really excite them. 

Our Verdict

Smart Fortwo 2007-2014

The Smart Fortwo is a unique proposition. Its emotional appeal is unquestionable and it is one of the most novel and innovative cars available.

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Comments
34

18 September 2013

The motor industry is a fairly blameless party in all this, and has been the butt of the same taxational and legislative jokes as the motorist.

But, if the collective might of oil companies, the insurance industry, the EU and a succession of governments are going to effectively conspire to price future generations of motorists off the road, then what did they expect to happen? Other than for the current crop to pay for the lack of the next, it would appear...

As aspirational cash cows go, £35 odd a month for a mobile phone contract looks like a relative snip.

18 September 2013

In late 2010/11 when I was looking for my first car while learning to drive I saw a Peugeot 206 1.4 Quiksilver. It wasn't anything special and it was listed for £995 on Autotrader. I looked up insurance on it because it looked neat enough - £3500 fully comp. After looking for a few months I found a lovely 2005 Citroen C2 1.1 SX that fell into the Group 1E bracket and managed to insure it for £1750 fully comp.

I'd think my insurance experiences would be the same for most young drivers at the minute and coupled with the high youth employment levels it makes car ownership almost impossible. Even those in employment would struggle to find the £150ish (based on my C2 first year insurance) needed just for insurance every month before they've even dreamt of walking into a dealership to buy or finance the latest Ford Fiesta, VW Polo or Fiat 500.

The Pass Plus scheme which gives a small bit of vital motorway instruction and a few other things doesn't bring insurance prices down & even taking some extra training with the Institute of Advanced Motorists doesn't bring them down a penny either so where is the drive (pardon the pun) for a young driver to take this optional tutoring for £125 (Pass Plus) and £249 (IAM) for the course?

Car makers can worry about young drivers not buying their latest models but the reality is car makers are pricing the young out their cars even in the used market on the forecourts. Insurance brokers say young and inexperienced drivers are the cause of every smash from Lands End to John O'Groats but the insurance companies are pricing young drivers out of getting that valuable first few years experience and giving no financial incentive for them to take further courses to improve their driving once they've passed their driving test.

Car makers need to take fresh look at their deals to bring in the under 25 market then look at the ownership costs once they've brought in the younger markets and they might find the answer to the problem.

18 September 2013

The first two comments are spot on. Every time I return to the UK for a visit I find the driving experience worse than the last time. One example is car hire companies screwing you on insurance (fully comp isn't fully comp etc). You collect the car, it's dark and raining and you are supposed to check it for dents and scratches, you return it and there's a chip in the windscreen and they want 600; took me 20 minutes to get them to back off. I got so fed up I got an Amex card which covers everything and now decline all cover, which means that they have lost my business.

Let me succumb to Godwin's law and complain about Nazi parking regulations and Nazi councils doing all they can to grab the motorist by the ankles and shake him upside down until all the money has fallen out. I feel hounded.

18 September 2013

@275snot599
The terms on a car rental agreement are absolutely outrageous. It's a mystery why people stand for them.

19 September 2013
Chris576 wrote:

@275snot599
The terms on a car rental agreement are absolutely outrageous. It's a mystery why people stand for them.

Um, because sometimes it's a little impractical to drive to say Spain, or Sicily, or South Africa, or California. All of which are places I have rented cars this year. You had best just stay in Blighty if you're so petty you care about a few pounds a day in CDW. Most of it I thought were pretty decent deals actually. Like someone else said get an Amex and you don't need that either.

Back to the original topic. There should be a mandated programme where young people can accrue NCB linked to the parents insurance with a HIGH excess. Thus, essentially the insurance co recovers the high premium in the case of crash, meaning they are no worse off. If a cheap 1-2k car is written off, it is just a total loss as it would fall inside the excess with the insurer being responsible for third-party costs as normal. This would in turn encourage the young ones to exercise maximum care. (For the sake of reference I am only 31 myself)

The other thing is young people are becoming more and more used to the idea of (rubbish) public transport. I think young people just get the train a lot of places or travel on package holidays. When I've gone on long driving holidays to say Italy, younger people have always looked slightly shocked at the idea of the 10-12 hours of driving it can entail. There's a want for instant gratification. As we become more urbanized, young people just want to get from A to B, as cheaply as possible. Of course, the cheapest way for a group of people to get from one place to another in the UK is usually by car....

18 September 2013

The real killer for enthusiasm or great fun cars for kids is the number of traps and cops with smiling tickets. You just cant escape them. No one wants to lose their licence for a decade! I remember being a hooligan with some skill and eventually picked up enough warnings rather than tickets to chennel it into rallying. Maybe more tv exposure for rallying would bring it cars into focus more often and give the best channel for oungsters to hone their abilities and be safe drivers on the roads. I became a much better and obedient driver once I learnt to rally

what's life without imagination

18 September 2013

Car manufacturers aren't really to blame here. Owning a new car has never be an investment. New car prices go up due to inflation, however, when you think about what you're actually getting for your money, you realise you are buying into years of development in safety, connectivity, frugality, technology and design. The cost of researching and developing a car is sky high, because the manufacturers recognise that there is only one opportunity to get it right and sell a car that people want to buy. Even a Ford Fiesta ecoboost has cost millions to develop. Also, consider that buying the car is theoretically a one off purchase (unless financing) and then it's years of insurance, maintenance, parking, fuel, tax, etc and that's where the problem of owning a car comes in. When you have governments and insurance companies using motorists as a cash-cow, owning a vehicle just doesn't seem like a dream anymore! Factor in traffic, traffic in cities and traffic fines makes even more off putting! The problem lies with owning a vehicle which is a very large commitment that people can't afford to make anymore. The state of the economy, employment and the general cost of living makes it even worse, and technology like smartphones and social networking give the final blow. I just wonder, if the number of people owning cars keeps falling in future years, from where is the govenment going to steal our money? Will we have higher vat? Higher income tax? Higher council tax? Higher traffic fines?

I've passed my test a couple of years back and have wanted to buy and own a car, however, for me, it's impossible at the moment, and this is due solely to insurance costs and fuel prices. To add insult to injury, this means i will get penalised in the future because i have had no driving experience. It's a no win situation and for me and others in a similar position! Governments are pricing us out of driving. When you consider the government's push to get manufactures to manufacture in the uk, it makes very little sense!

18 September 2013

Why is this a bad thing? The only way our overpopulated planet can survive is if we are more careful on how we utilize our rescources, while polluting less. As part of this trend, we need to switch from private to mass public transportation ASAP, even at the cost of some inconvenience for all of us used to unfettered private car use.

289

19 September 2013

...Oh please!!....I think you are on the wrong website.
How about all the jobs at risk if the Auto Industry collapses...just for starters?

18 September 2013

I can't find any other consumer product that is so heavily taxed right and left, up and down X 10 than the car. Ownership is so costly (no matter the cars price) that you need a good income to manage it.

Another problem in today's metropolis areas is the congestion and lack of parking space and the horrendous parking prices. Tokyo was maybe the first big metropolis to be hit by it where people in the area had to show they had a valid parking space to get permission to buy a car. It's the same in all big or small metropolises where jammed public transport is the only viable option.

Dan

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