A great article about teenagers by Joel Stein dated September 23, 2013 is found in Time Magazine. The article rants about the current generation of teenagers. For all who are interested in the culture of each generation, particularly shortcomings, I highly recommend the article. One part of the article illuminates a significant impact on society and how it will be shaped in the future. Did you know that as a percentage, 33% fewer teens have drivers licenses today than thirty years ago in 1983.
An April 2010 article by the Center for Automotive Research (CAR) noted that the Automotive Industry directly employees 1.8 million people, spends $16 to $18 billion in R&D and added 3 to 3.5% to GDP in 2010. An April 15, 2013 article noted that the auto parts industry accounts for only 2.3% of GDP, employees 734,000 people nationwide and adds $355 billion to GDP.
A decrease in teen licenses means that fewer members of this generation will own cars. Not too many people buy cars when they cannot drive them. This situation may explain the recent phenomena of Boomers buying more cars designed for younger people than younger people themselves.
The reasons are varied. Social Media, smartphones, Facebook, Face time and Skype provide ample opportunity to connect with friends decreasing the reasons for teens to travel to meet people. Teens can easily connect without leaving home. As a result, the need to spend money on a car with the attended costs of insurance, gasoline, maintenance and upkeep is eliminated. Parents (mostly Boomers) have been willing to drive their children where they need to go – this cheap parental service further decreases the need for teens to obtain licenses much less own a car.
This phenomenon helps to explain the current unusually long average life of automobiles. In August 2013, CNN Money issued a report announcing that the average age of automobiles in the US has risen to 11.4 years. The article stated that the high quality of automobiles are lasting longer than ones built in earlier generations (don’t tell that to Toyota that advertises 90% of certain models have been on the road for 30 years). The article offer reasons for car longevity, including the recession, people wanting to eliminate car payments, but surprisingly it did not mention fewer teens driving.
With two children in the crucial 18 to 24 year age group, I witnessed first-hand this phenomenon. Neither my daughter nor my son obtained their license upon eligibilty. My son, for various reasons, waited until a few weeks before leaving for college to obtain his license. My daughter who is three years older has yet to obtain her license. For both my wife and me, that behavior would have been unthinkable in our day as we and our peers savored the freedom driving a car represented. My children enjoyed their connections through social media and were just as happy. As a matter of fact, in my unscientific study, half of their friends did not obtain their license immediately either.
If this trend continues and a third fewer Americans obtain their driver’s license, the importance will be significant. Urban settings with good transportation will be in greater demand. The percentage of auto related jobs in America (most of which are very high paying) will shrink. Perhaps there will be fewer dealerships too; but those that remain may be so large they may have the ability to manipulate markets. Fewer mechanics will be needed and autos will be designed for older people rather than the young. The gasoline business (basically created by John D. Rockefeller) will continue to shrink. Although it is too early to change investing in the auto industry, if this trend continues then urban housing, mass transportation and the attending industries that cater to them will thrive in the next decade while the auto industry and the attending industries that cater to that group will suffer.
From a cultural shift and planetary perspective, fewer natural resources will be consumed if public transportation is utilized and an urban setting takes precedence over a rural setting. Let’s be cognizant of this unusual and less publicized demographic change – which will alter the character of the American household, investments and values in significant ways .
Sources:
http://www.cargroup.org/?module=Publications&event=View&pubID=16
http://money.cnn.com/2013/08/06/autos/age-of-cars/index.html
