The word gig economy first described the rise of insecure contract work, rather than permanent full time jobs. Now even relationships, AirBnB, social media and subscription-style entertainment reflect lack of permanence or commitment. So it makes sense that young people do not seem interested in owning – or even driving – cars.
Youth driving rates
Seniors over 80 are more likely to be driving than young people 18-24. A report on youth driving in 13 countries found licensing rates were falling in the US, Canada, UK, Japan and most of Europe.
In Australia, this picture is more nuanced. The 2012 and 2016 HILDA surveys show the percentage of young licence holders is still going up with age and year:
- In 2012, 65% aged 18-19, 80% aged 20-24
- In 2016, 64% aged 18-19, 83% aged 20-24.
By the time young people reach their mid-20s they are as likely to have a licence as they were at that age 10 years ago. So why are they delaying getting a licence and buying a car?
Blame the economy
Fears of recession may be one reason. Sales of new vehicles have slowed for 17 months, longer than during the GFC. This is in spite of a rise in population of almost 600,000, some because of migration. Meanwhile, house prices have steadied or fallen and the recent drought has hit regional towns hard.
Blame job prospects
Job prospects in this economy have become more uncertain. With the rise of so-called gig work, young people will consider what car ownership means. They buy a new phone every 2 years or less. But can they service a 4-year car loan if they already owe thousands of dollars on their HECS debt? What would happen if they could not get another job contract for several months?
Blame tight lending
Tighter lending came in late 2018 when ASIC banned car dealers from charging flexi commissions. Dealers had been allowed to charge interest rates higher than those charged by the lenders, and pocketed the difference. The FCAI recently claimed lending for new cars has become too tight, although finance companies say their criteria for lending have not changed.
Owning is optional
Where ownership used to be desirable and necessary, young people may think owning a car is optional. They do not need a car if they live in large cities and use delivery services provided by supermarkets, Amazon, Uber, Uber Eats etc. Some young people still live at home and, if their parents are not driving them around, can share the family car.
They can share
We know the average car in Australia is used only 4% of the time. Services like Carly, Carbar, HelloCars and Car Next Door promote the sharing economy. Car Next Door currently has 150,000 people registered in Sydney, Brisbane and Canberra.
Honda recently launched a subscription service in South Australia called Drivible. It compares having a subscription for TV, phone and the internet with subscribing to a car. The language is typical of non-commitment: “freedom to drive the car of your dreams with none of the downsides of car ownership”.
Are young people that different?
It is not clear whether young people are rejecting cars, or just ownership, in the same way they reject traditional commitments. For example, young people under 35 are much less likely to marry. But eventually, many do what people have always done and buy cars, get married, have children.
A US study found millennials own as many cars as baby boomers and they drive longer distances than the older generation. In fact, their lifetime vehicle use is likely to be greater. Far from being the green generation, their transport preferences are similar to others, although they prefer environmentally friendly products. While they consider the environment when they buy a car, price is more important.
Someone at Monash University wrote, “Once someone shapes their life, work and home around the car it is far, far harder to persuade them not to use it.” If young people continue to shape their lives around non-commitment, it may be difficult to change that too.